Demand for gold bullion is pushing prices back towards the $1300 an ounce psychological threshold. The yellow metal plundered almost $50 an ounce a little over two weeks ago, but the fall in price was curbed by the prospect of unprecedented banking policies in Europe.
Gold began the week at $1252.20 per troy ounce, but with market sentiment leaning towards precious metals, has gained momentum and is now selling at a healthier looking $1274.20. Bullion is expected to enjoy further gains today before Wall Street brings down the shutters for the weekend.
The precious metals market is renowned for its volatility, but has been relatively stable over the past few months. Analysts had been expecting prices to average around $1250 an ounce, but the Ukraine crisis added $100 to the price before stabilising around $1300.
With tensions escalating into violence in Eastern Europe, traders were in limbo for a while and were waiting to see how the geopolitical struggle would unfold before relinquishing their gold reserves.
An upbeat looking global economy was giving the green light for dealers to sell gold, and once the Ukraine crisis was resolved, the value of gold dipped almost $50 in a week. It was a great time to buy and if you didn’t take the opportunity to buy gold under $1300 then, you should do so now as that is the direction prices are heading.
ECB policies help gold prices
So what changed the direction of gold? It should come as no surprise that a central bank is involved, this time the ECB announcing plans to introduce policies that will cut interest rates on bank lending in an attempt to encourage companies to invest and fuel the flagging economy.
In an attempt to avoid deflation of the Euro, ECB Mario Draghi pulled deposit rates into the negative – the first time in history any bank in the world has taken such drastic measures. Further policies have been promised in the future.
It is hoped the revised policy will encourage businesses in the Eurozone to assist expansion, but it comes at a cost for savers in the general public who will not gain interest on currency-backed funds such as pensions.
As a result, investors have turned to gold. The precious metal is seen as a safe haven investment which promises a return on investment – something you will not get in the current economic climate if you put your money into over-priced equities.
It is therefore advisable to follow suit and add gold to your investment portfolio in order to top up your pension fund. Opting for other investments at this stage is more likely to lose you money in the long run.
Precious metals on the other hand will continue to rise, and particularly in the long-term will earn you a healthy ROI – but only if you buy now before prices get pushed over the $1300 threshold.
To protect you financial future, head over to coininvest.com today and check out the latest deals on gold and other precious metals.