Fears throughout the financial world of a double dip recession were demonstrated on the 19th August when gold prices soared to its highest ever rate; in a period where the United States dollar and Japanese yen, considered to be two of the stronger global currencies, have both slipped. Marking the biggest one-day rise of the [...]
Fears throughout the financial world of a double dip recession were demonstrated on the 19th August when gold prices soared to its highest ever rate; in a period where the United States dollar and Japanese yen, considered to be two of the stronger global currencies, have both slipped.
Marking the biggest one-day rise of the commodity in four months, the spike represented prices rising to $1274.75 per ounce. On the physical market, demand for bullion has risen to its highest peak since late 2008. As Jonathon Potts, managing director of FideliTrade, a large US bullion dealership commented, “Physical buying is at its strongest point since the latter part of 2008, fear was driving it then and fear is again driving it now. I just hear over and over again from our clients that they’re scared to death about where the world is heading.”
This is reflective of the so called ‘safe-haven’ status in gold during periods of economic difficulty, particularly whilst many currencies from large economies continue to struggle. This is highlighted in a time where major economies and their currencies are in a weak state, German and French shares were down by 2%, the FTSE 100 dropped by a one percent and US bond yields remained relatively unchanged at low levels. The rate of the dollar remains low and the currency is still viewed as unstable, which has another impact on the price of gold as the precious metal is priced in dollars. Thus, with the rate of the dollar remaining low, it makes the overall price of gold much cheaper for forex trading with other currencies, and is another strong contribution for gold prices rising by 16% in this year alone.
No related posts.
Leave Your Response