Gold Prices Down As US Dollar Strengthens

Trader sentiment towards gold is bearish and precious metals look to be on course for the predicted decline. After a brief rally this month ­gold prices hit their highest peak for six months, but a further 0.6% drop in Singapore this morning it appears the next few months will be a buyer’s market rather than a sellers.

The performance of precious metals in Asia is a strong indication of a global trend that will bring the value of precious metals down to very attractive prices – especially when you consider the amount gold has the potential to accrue over the long term.

The majority of analysts have predicted gold prices will fall dramatically this year, possibly to lows of around $1064 averaging out at $1220. These prices make 2014 a great opportunity for investors to add precious metals to their investment portfolio.

What is causing gold prices to fall?

Gold is used by traders as a hedge against riskier investments, usually equities. This way, if the equity loses money, the trader can still make money on gold because when currency is weal, precious metals are stronger.

The emerging global economy is getting stronger and traders have more confidence to invest more in equities and reduce their spending on precious metals. Because demand for gold is lower, prices fall.

The US Federal Reserve is also expected to continue the tapering of its bond buying stimulus which is another indication the US economy is getting stronger despite recent data being lower than predicted. However, the US economy is improving despite performing weaker than estimated.

Subsequently, the US dollar has picked up momentum this week after a period of uncertainty. With China also returning to work following the break for the New Year celebrations growth is expected to speed up.

Why buy gold rather than stocks

If you are new to investing, you may be wondering why we are advising you to buy gold right now rather than stocks. The simple reason is that stocks are very expensive right now and are very unlikely to produce long/term gains. You have heard the trader sentiment of buy low, sell high!

Stocks are actually hitting all/time highs at the moment and can only go one way from there…and that is down. Stocks do not recover as well as gold, the latter recognised as a safe-haven investment because dealers rely on it when stock markets crash.

And in the current economic climate the markets will crash and they will fall heavily. The credit trends is placing too much burden on national economies. The US has already racked up almost $18 trillion dollars, another $10bn of which is added on a daily basis and the senate has agreed to allow unlimited spending until March 2015 – providing the ceiling doesn’t come crashing down before then!

With the inevitable credit crash looming the world is heading for another recession and the next one is likely to be even more devastating than the 2008 banking crisis. Gold prices could double in price from their 2014 value so to ensure your financial future is protected visit and add gold bullion to your investment portfolio today.