Gold has traditionally served as a safe haven for investors whenever the economy showed any signs of crackling. This year the gold price has shown an increase of about 20 percent. Is this a prelude to an even bigger price increase or has gold reached its top, and will we see a decline. Watch these factors and you know.
The U.S. Elections
Although short term, the elections in the United States could play a large role in determining the gold price. If Donald Trump comes out as the winner, this result – combined with the struggling American economy – could drive up the gold price as the safe haven for investors in these politically and economically uncertain times.
The Federal Reserve is on everybody’s mind these days. Word is out that the American central bank will increase the interest rates in December. Is this true or are these just rumors? If the Fed will increase the interest rate the gold price will go down as alternative investments will show to be more promising.
China and India
China and India are the 2 largest gold consumers in the world. Lately, the demand in both markets has been slightly on the decline, which has resulted in a lower gold price. It’s hard to say what this will do next. A lower price may boost demand, which in turn will boost the price again.
Exchange Traded Funds, especially gold ETFs, can also give you an insight in what the gold price is most likely to do next. How much money is going into these gold trackers? So far, we have seen 25 million dollars going into gold trackers. This has proven to help the gold price.
The United States is not the only country facing economical and political instability. When Great Britain voted to leave the European Union, British stocks and the pound dropped. This was also a time investors started investing in gold (and Brexit Hack for that matter), boosting the gold price.