Gold products are back on the rise after a slight drop in prices over the last few weeks. Prices reached a two-week high when the market closed today. Gold settled at $1,269.90 per ounce, up .6 percent, while the dollar was down .1 percent. When the dollar weakens, this usually boosts the price of gold. This happens because investors who hold other currencies can afford to buy more of the precious metal.
Another factor that is bullish for gold are September’s inflation numbers, which diminished the expectation of an interest rate increase for many. However, other investors still hope that the Federal Reserve will drive interest rates up before the year ends. Since gold doesn’t pay interest, bears predict this could stoke a drop in prices for gold products. Either way, with the volatile economy and weakened currency, it pays to invest in the safe haven that gold provides.
Physical Demand is Rising
The surge in gold prices this year was driven mostly by speculation, as opposed to actual physical demand. Regardless of whether the hike in interest rates comes to fruition, physical demand across the globe is rising. Industrial production in major economies continues to increase and the wedding and festive season in India has arrived, which is when their need for precious metals peaks.
Recent data from China, one of the largest importers of gold and other precious metals, shows that their economy grew 6.7 percent and industrial production rose 6.1 percent during the last quarter. As the world’s second-largest economy shows the best growth factors across the globe right now, the country’s demand for gold products is expected to increase.
Whether an interest rate hike occurs, so many other factors impact the markets right now. The United States presidential election is a only a few weeks away and has investors on edge. Many believe there will be market repercussions regardless of which candidate is elected.
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