Gold Prices Per Ounce Expected to Rise This Week

Gold priced gained another £13.20 an ounce last week to go into a fresh week at $1383.30. Geopolitical tensions in Crimea and a default payment in China is giving traders plenty of cause for concern, and gold is on an unexpected bull run.

As things stands it would appear the concerns inside financial institutions is genuine. The dispute over Crimea could not be settled satisfactorily between Russian foreign minister, Sergey Lavrov and US Secretary of State, John Kerry when they met in London on Friday.

As a consequence gold prices continued their steady climb last week and the right to choose which country they wanted to be part of was given to the people of Crimea.  They chose Russia.

Russian sanctions

Given that Ukraine is bankrupt the decision to join Russia was a relatively simple choice for the Crimeans. The majority of them are also ethnic Russians so were always going to swing in favour of the Soviets.

Kerry has issued Putin a warning that sanctions would be imposed on Russian exports, but its threats are empty. The Russians can respond by dumping all the assets they own in dollars in substantially weaken the greenback. With the dollar so weak and the US almost $18 trillion in debt, the Russians could even collapse the dollar.

The only way for the US to win this particular battle is to back down and let things ride out in peace. However, it has been reported that US military chiefs are angling for a military response. To save the dollar and retain their currency as the world’s default currency, the senate may decide that war is their best option.

A little trouble in big China

The US however cannot justify a military strike and the latest political spat will blow over soon enough. However, that does not mean gold prices are likely to fall this week – or perhaps any time soon.

Just as US data spark signs of life, the Chinese economy is teetering on the brink of collapse. Defaults on copper payments last week could have reverberating consequences and cause a credit crunch in the People’s Republic.

As the world’s second largest economy, China has a massive influence on the economy a slowdown in growth is a concern, but the potential collapse of the yuan will seriously damage the Asian market and put a dent in emerging economies who rely on Asian exports.

Going for gold

Traders are expected to stick with the safe haven of the precious metals market this week and with so much uncertainty over the future of the global economy, investing in gold is a savvy choice. When currency is week precious metal price are strong and gold prices per ounce may never fall this low again.

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