Gold price shows signs of life

Better late than never, the price of gold has had a bit of a run over the last couple of days.

Many traders and investors would have assumed that the US teetering on the brink of a fiscal meltdown as it came perilously close to hitting its debt ceiling, coupled with the risk of a debt downgrade, would have been the catalyst to see gold charge higher.

However, many of the old rules that gold has been associated with appear to no longer apply. Arguably the aggressive weakness in the US dollar over the last 48 hours has also played a part in the gold price once again retaking the $1300 level.

Also brewing in the background has been a resurgent demand for the physical commodity to supply Indian and Asian markets. The balance of consumption over the last six years has shifted – India has doubled its annual purchase and Chinese demand has increased, and it is now three-and-a-half times more than it was in 2008. It is this hunger for the physical product that has helped stabilise the yellow metal’s price, as traders from the west have been happy to flood the market with paper exchange-traded-funds.

With equity markets looking set to have a run higher, certainly until the next round of US political-inspired issues, it are difficult to see the greater appeal of this security hedge.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.