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\n<\/span>Gold as a \u201csafe haven\u201d<\/b>. During difficult times such as an economic recession or uncertainty, many investors invest in gold due to its everlasting value. When the price of bonds, equities, and real estate drops, the interest in gold rises, fuelling a higher price. Gold can be used to reduce the risk of<\/span> inflation or currency devaluation. Gold is also regarded as a provider of protection during times of political instability.<\/span>
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\n<\/span>Production.<\/b> Mining gold is an expensive procedure due to gold being a rare commodity and therefore precious. Since 2012, there have not been any significant discoveries of new gold deposits, therefore minors now have to dig deeper to find more gold reserves. This challenge causes more issues: miners being exposed to more hazards as well as the environmental impact. So.. it is more costly to extract less gold. These factors increase the costs of mine production, which can result in higher gold prices.<\/span>
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Central Banks.<\/b> Many nations from around the world hold reserves such as these that mainly consist of gold.<\/span><\/p>\n The value of the US Dollar. <\/b>Since gold is a dollar-entitled precious metal, its cost per ounce is immediately influenced by the value of the United States dollar. So, a stronger US dollar tends to keep the price of gold lower, and vice versa-when the value of the US dollar drops it’s likely to cause the price of gold to increase.<\/span><\/p>\n Inflation. <\/b>Inflation or the increasing price of goods and services is another factor that can influence the price of gold. Rising levels of inflation tend to drive the prices of gold higher, on the other hand, decreasing levels of inflation cause the prices of gold to drop. <\/span>Inflation is mostly a sign of economic prosperity. When the economy is thriving, it\u2019s customary for the Federal Reserve to expand the supply of funds. Expanding the supply of funds weakens the value of each existing banknote in circulation, making it more costly to acquire assets that are considered valuable, such as gold. In other news, a better picture of the European Central Bank’s intentions for future interest rate hikes has backed the euro and appears to be a key factor in current & further price development. The only debate seems to be whether the ECB will start raising interest rates by 25 basis points in July or 50.<\/p>\n The Forex News Week Ahead<\/strong><\/p>\n A pretty quiet week on the news front this week, but watch out for interest rate news from Australia on Tuesday (GMT) and Europe on Thursday. If you do trade on Friday things get a bit busier with Canadian employment and US inflation releases.<\/p>\n ++++++++<\/p>\n Trade for clients & receive a substantial profit share<\/p>\n
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