3 Reasons why Gold may rise further!

Most Herts Essex gold buyers or any gold expert will most probably believe that the precious metal will continue to perform well for the coming year as a result of a trio of global factors, which I will aim to simplify as best I can! 

Gold has become more popular with investors as more extreme political candidates have gained traction in the UK, US and some parts of Europe. Additionally the risks of a Brexit vote have also added to the appeal of gold for many investors, seeking to own a safe haven.

The second reason is the changing inflation and interest rate expectations in the US.

Theoretically at least, when interest rates rise, it should push the value of a currency upwards. Markets have been expecting several US based interest rate rises, pushing the value of the dollar upwards. A stronger dollar is often regarded as a sort of negative for gold, because the dollar is personified by many investors as a safe haven in certain situations just like gold.

But as economic conditions have become less certain, expectations of interest rates rising have become more muted, both here in the UK and the US so this has caused the dollar to weaken, reducing the appeal of the greenback as a safe haven, in layman’s terms causing investors to buy gold.

The third reason can seem more complicated to explain but equity markets are currently performing rather weakly, investors have started to buy gold again as a diversifier, so as to be less reliant on the up and down performance of either equities or bonds.

Also the instigation of negative interest rates and quantitative easing in Japan and the Eurozone has caused the profit obtainable on many bonds to decline, this lack of available income has reduced what economists call the ‘opportunity cost’ of owning gold, that is, the attractiveness of owning alternatives to gold is reduced.  

So if you want to see a good cash for gold return then perhaps hang onto your gold for a while yet!