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Thursday, 24 January 2019

Gold has not Lost its lustre yet

Gold was at a life time high of $1921 an ounce in September 2011 when the US Federal Reserve was concluding its bond buying program (QE). During that period gold was everyone’s favourite metal. But by the end of 2015, gold prices declined to $1046. Sometime around that, the Federal Reserve, led by Janet Yellen has raised its key interest rates for the first time in 7 years. That’s the reason gold plunged. But now it seems that gold is finally emerging from an 8 year bear market. And that’s the reason we feel that gold has not lost its lustre yet.


They say that gold has an inverse relation with the dollar. When the dollar is strong gold is weak and vice versa.

It seems that gold has finally made a comeback and there are many factors responsible for this -
Gold seems to be driven by the fact that the current political standoff in Washington will lead to an escalation in crisis. Further the longest government shutdown in U.S history along with a gradually growing economy and rising global debt levels will add fuel to the fire. And when geopolitical issues are mentioned we can’t ignore the fact that the trade tensions between US and China have not been resolved yet. These factors strengthen the speculation of a push in gold prices.

Even though the dollar was up during the week, markets still prefer to stay loyal to gold.

Market watchers say the dollar may also come under pressure as the U.S. government shutdown begins to weigh on domestic growth. Having said that, gold prices are bound to rise.

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