Why is Gold Up Today?

Why is Gold Going Up?

Gold prices have experienced sharp increases over the past few days. Thomson Reuters GFMS annual gold survey released today shows that global investment increased 20% last year to $80 billion, leading to the nominal high last September of $1,920/oz. This is primarily attributed to the physical buying of bullion.

Let’s recap what has happened in the financial markets recently to affect gold prices.

What’s Happening with Gold Prices

1.23.11 – Gold has climbed 1.5% to a one month high, due to concerns about the Eurozone sovereign debt crisis. Risk appetite has returned lifting markets across the board, after China announced better than expected economic growth in the last quarter of 2011. It is important to note Central banks increased net purchases by a massive fivefold to 430 tons last year, and may buy another 190 tons in the first half. Combined official holdings stand at 30,788.9 tons, data from the London-based World Gold Council show.  “Attitudes among central banks haven’t really changed,” Thomson Reuters GFMS annual survey said. “There’s still that desire to come into the gold market to diversify some of the assets away from foreign exchange and to boost gold holdings.”

1.24.11 – Gold is propelled higher on Fed intentions to keep Fed Funds near Zero until at least 2014. Gold up over $30 to $1,700!

1.25.11 – Gold rose 2.5% today and broke $1,700 to $1,712.80, its biggest one-day gain in the past 4 months, as the US Federal Reserve’s 11 out of 17 members voted that interest rates would likely remain near zero into late 2014. Investors sought safe haven refuge into gold fearing their portfolios would lose value as Central Banks flood the markets with loose monetary policies and more cash for governments that can’t seem to manage their balance sheets.  A group of 7 major economies now have interest rates that average 0.5%.

1.26.11 –  Gold is up over 9% year to date and is currently trading around $1,739.

How High Will Gold Go in 2012?

Pricewaterhouse Coopers surveyed mining companies and found that 80% of executives expect gold to increase this year to $2,000/oz.Gold may climb to a new nominal record above $2,000/oz by early next year as concern about currencies and low interest rates encourage investors to seek a protection of wealth, Thomson Reuters GFMS said.

Investors sought safe haven refuge into gold fearing their portfolios would lose value as Central Banks flood the markets with loose monetary policies and more cash for governments that can’t seem to manage their balance sheets.  A group of 7 major economies now have interest rates that average 0.5%.

Now is the time to invest in Gold..

»  Contact Cornerstone Asset Metals today to learn more about buying gold as an investment.