Demand for physical gold is expected to increase this week as gold prices fell to their lowest ebb in 15 weeks. Encouraging economic data, promising results in EU elections and an optimistic outlook on the Ukraine crisis all aided gold’s downfall.
Consumers have waited patiently for the price of gold to drop since February. The geopolitical crisis in Ukraine, which revived lingering Cold War tensions between Western governments and Russia, supported gold prices around the $1300 an ounce psychological threshold.
The appointment of Petro Poroshenko as President of the Ukraine following Sunday’s vote promises to bring an end to geo-political conflicts. Russia has already declared their intent to open direct talks with the chocolate magnate, and subsequently relaxed investor appetite for the safe haven asset.
However, with continued clashes between Pro-Russian insurgents and Ukraine forces, the crisis is far from over. Although Putin has withdrawn troops from the eastern frontier of Ukraine, Poroshenko’s US appeal to send troops could prompt a U-turn.
Buy gold now
Given the delicate political situation in Eastern Europe, escalating conflict could trigger another crisis and push gold prices back up beyond the $1300 price point. Investors looking to add precious metals to their investment portfolios should look to buy gold now whilst prices are low.
At the turn of the year analysts predicted gold prices would average $1220 per troy ounce in 2014. This was readjusted to $1250 shortly after the Ukraine crisis posed a threat and pushed gold prices up towards $1380 an ounce.
Traders reacted to positive economic data in the US with a sell-off of safe haven assets on Tuesday. With prices closing at $1263.30, gold is nearing its predicted average. But how long will it last?
Upbeat US economic data
Market sentiment swung towards currency backed holdings as Wall Street took advantage of more signs the global economy is on the road to a full recovery. Figures released by the Commerce Department showed durable goods for April delivered higher than expected results.
Consumer confidence in the US also improved throughout May and with that trend expected to continue, major averages in the Dow and the S&P 500 have climbed into positive territory.
Upbeat economic data in the US give the Federal Reserve more ammunition to justify their decision to ease off money printing stimulus. Tapering began in December and is expected to end later this year, possibly October or November.
Precious metal deals
Prices for precious metals should suffer further losses providing geo-political interference does not spook traders and upset the market. Recent activity marks the start of a great opportunity for consumers to purchase gold and silver at attractive prices.
Look to online traders offering great deals on bullion products in the coming weeks and keep an eye on developments in the Ukraine to determine which direction spot prices will go.
The emerging economic revival bodes well for investors looking to take advantage of low gold prices. To get the best deals at coininvest.com check out the online store and put your order in today whilst stocks last.