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Gold Prices Rise as Investors Take Safe Haven

The year ended a bit roughly for investors and stockholders when experts believed that bear market is slowly approaching. In 2018, the longest bull market in American history was recorded and everyone rejoiced about the news including United States President Donald Trump.

However, this didn’t last any longer because of how much the S&P 500 stocks continue the to go downhill and experts are convinced that this is a massive sign of the bear market approaching if it hasn’t already. The new year serves as a new beginning for some and they look at the gold’s rising value may be good and at the same time a bad thing for the global market.

Gold Rises Up

It has been pretty tough for the global market these past couple of weeks, and it may continue to be really challenging as the gold recently reached its highest so far in the last couple of months. The Spot gold was reportedly up by .23 percent which led to it being $1,285.10 per ounce. The senior market analyst of OANDA, Craig Erlam even said that this might be a risk-averse market at the moment, that is because the shares went down once more, but then the oil prices and even the Japanese yen were in contrast by being strengthened in the last few weeks. This, however, will still slow down the global economy.

The market is also waiting for the next move of the Federal Reserve when it comes to the interest rates for the first quarter of 2019. Its chairman Jerome Powell continue to pursue higher interest because of the recent bull market, but things are changing now.

He is expected to make stamens regarding the matter this coming joint discussion that he will be participating in this weekend, along with the former heads of the Fed Janette Yellen as well as Ben Bernake. It is believed that the people are expecting the dollar to soften since the interest rates could change its perspective by supporting the gold prices rising.

Meanwhile, investors see it as a somewhat what they can consider as a safe haven, especially with what is going on with the global market at the moment. It has been known for years now how gold has been used more commonly by investors whenever the global market is uncertain about its standing.

The dollar index lost about 0.5 percent in just one night, making it even more affordable than other currencies. With the rising rates in the United States right now, this could be taken advantage of by other financial markets. United States President Donald Trump is reportedly considering to make an executive order that would benefit the American telecommunications industry against China.

 

How Does Gold Affect The Trade

The last time investors took all of their attention to gold, was about a decade ago in 2008 during the financial crash that happened. However, in 2018 the trade wars that began between the United States and China didn’t immediately affect the market, however, it is quite certain that it is taking full effect now and the metals have already proven it.

Last August, gold prices were only below $1,200 per ounce, and that was even for the very first time in the last two years. The dollar was allegedly to blame because of how much it strengthened ever since Trump took over the presidency. If the Fed made another interest hike for this first quarter, then it will mean that the dollar will most likely become stronger. The United States Department of Labor, on the other hand, are not making any changes when it comes to consumer prices.

This affects gold since the currency markets have the upper hand on the gold price, even if it is being traded all over the world, dollars is its main denomination. This is one of the major reasons why investors believe that gold is where they turn to when things like this happen in the global market.

However, other experts believe that having gold as their safe haven may still be a little too risky. One of the main reasons for it is that metals like gold and silver, don’t have any interests, unlike bonds. It may not be able to protect you if ever there is inflation and there is no guarantee that it will appreciate when it comes to its value.

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