Gold had yet another strong day in the market on Tuesday, and for good reason. The precious metal is seeing increased demand for several reasons. Today, we’ll talk about the demand factors that are driving the price of the precious metal up at the moment, and what we can expect to see from the price of gold.
Reason #1 Gold Is Headed Up
The number one reason that gold is seeing such strong gains in the market at the moment has to do with the United States Federal Reserve, their plans with regard to their interest rate, and recent news that will likely delay these plans.
For some time now, the Federal Reserve has been planning to increase its interest rate at some point in the year 2016. Of course, a higher interest rate would mean that the USD would rise in value, leading to resistance in the price of gold. However, throughout the beginning of the year, economic conditions in the United States caused delays to the rate hike plans. Nonetheless, more recently things have seemingly been improving, leading to expectations that the Fed would increase its rate in September. Of course, this would be bad for gold.
However, recent economic news suggests that we’re going to see more delays in the rate hike. Recently, we received news that in the month of August, the United States economy only added about 151,000 jobs to its economy. Not only is this below the key mark at 200,000 jobs, it widely missed economist expectations at 170,000 jobs. As a result, investors believe that the Fed will keep the rate the same at this month’s FOMC meeting, helping the price of gold continue on its upward trend.
Reason #2 For Continued Gains In Gold
The second reason that gold is continuing to rise has to do with the safe haven properties associated with the precious metal. At the end of the day, gold is an important commodity that’s not just used in jewelry and decorations. Instead it’s used by investors as a way to keep their assets safe when economic and market conditions are concerning.
At the moment, economic conditions around the world seem to be improving. However, they are still concerning at best. As a result, we’re seeing a continuation of strong safe haven demand for the precious metal, which is leading to further growth in its price.
Reason #3 That Gold Is Continuing Upward
Finally, while jewelry isn’t the only use for gold, it’s a big one, which is one of the big reasons that we’re seeing increasing prices! As with any other commodity, gold is heavily dependent on the law of supply and demand. This means that when supplies are up and demand is low, the price falls and when supplies are low and demand is up, the price climbs.
At the moment, demand for gold Jewelry is headed upward in a big way. In fact, as of mid-August, the United States was seeing stronger demand for gold from jewelers than it has seen in around 7 years! This is in addition to India’s wedding season just around the corner, where jewelry demand is climbing as well!
What We Can Expect To See Moving Forward
To be sure gold has had an incredibly strong year. While we’ve seen a bit of a lapse in growth as of late, all signs seem to be pointing to further bullish activity. Consequently, I’m expecting to see more gains in the price of gold ahead.
Chart image c/o Tradingview.com
This postfirst appeared in Gold-Eagle.com.
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source http://goldsilverintel.com/gold-price-continues-upmore-gains-ahead/
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