Gold prices were up again Tuesday as key market influences remain uncertain. A slow-down in China’s manufacturing sector, US stimulus tapering and turmoil in the Ukraine has left traders playing safe.
After gold prices slumped almost 30 per cent in 2013, precious metals are forecast to drop even further this year. However, recent data indicates the global economy is not recovering as strongly as it appeared to be.
Since the turn of the year, a number of influences has kept precious metal values on an even-keel, even driving prices up over US$1300 to protect trader investments against riskier hedge funds.
Ukraine warn of financial crisis
The violence in the Ukraine may have relaxed since runaway President Viktor Yanukovych fled the country, but acting President Oleksander Turchinov has warned of a potential bank default.
The fall-out of civil unrest in the Putin-controlled country could affect gold prices as Ukraine residents are left in the cold without hard currency. A bank bail-out would also be a disaster.
Elsewhere, traders restored their confidence in the market on Tuesday ahead of US data. Gold prices slipped 0.2 per cent amid leaked rumours the economic recovery in the US will be positive. Of course, at this stage they are only rumours.
China buying gold
A slow-down in the growth of China’s economy has also raised concerns for the global outlook, but investors are taking the break for New Year into consideration. We should expect to see an improvement by the end of the first quarter.
China also continues to buy huge quantities of gold which is pushing up prices in the Far East albeit have slackened off from their 2013 purchases. Early trading in Singapore is often a good sign of global trends so we could see gold prices fall a little further today – although much depends on the market sentiments of Wall Street.
For the time being however, there is still uncertainty about the global recovery and the precious metals rally is expected to be drawn out for a few more weeks at least. Given the potential financial collapse in Ukraine, it would be a good decision for the Eastern Europeans to buy gold.
All eyes on the FED
The biggest influence on gold price right now however is the US Federal Reserve. The dollar slipped 0.1% against leading currencies, but chairwoman Janet Yellen insists she will continue to taper their quantitative easing program by $10bn a month.
Yellen is due to deliver a speech to the Senate Banking Committee on Thursday about her proposed monetary policy. If she can convince the senate the US economy is in a strong position and the recent data was merely an upset caused by the Christmas holidays, it could be the onset of the predicted decline of precious metal prices.
There may be some insecurity amongst traders at the moment, but gold prices will have to bull or bear at some point. The smart money is on falling prices which makes 2014 a great time to invest in gold. For the latest deals check out the prices from coininvestdirect.com.