Gold trades high on Brexit and US elections
November 7, 2016 7:48 amVideo
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Precious metals are considered by some as part of the current year’s best performing investment products. Despite the uncertainty of several futures markets, the demand for gold continues to increase by investors who are on the look for safe haven assets. It would also be wrong to assume that central banks are looking to sell any of their gold reserves.
A large number of investors have been unsettled lately due to a number of recent events or current developments such as June’s Brexit vote in the UK, the possibility Donald Trump being the next president of the United States, while there is political uncertainty within some Eurozone countries such as Italy and Spain.
Current market volatility has driven traders to keep away from other investment alternatives and consider the purchase of physical gold. It is not very easy to trust the macroeconomic implications under the current conditions and maybe some feel that gold is somewhat unaffected by short and medium term economic events. These people do not consider cash to be king any more as some individual savings accounts now offer interest of slightly higher than 0.02%. So this group of traders is hesitant of investing in the short-term nature of money markets but rather prefers to have long-term savings because of the stability of gold’s price.
Since gold’s all time high price of $1,920.86 per ounce during September 2011, its price had dropped by more than 83% during the late stages of 2015 to $1,046.17 per ounce. Since that period, the yellow shiny metal’s price recovered by more than 24% as it hovers around the $1,300 per ounce level. And it is worth mentioning that this level currently holds regardless of the possibility of an interest rate increase during the next Federal Open Market Committee (FOMC) meeting in December. There is limited evidence not to favour the price given the current global economic and political volatility.
Last week was positive for gold as each trading day ended with price increases. On Monday and Tuesday, the price of gold increased by 1.8% and reached $1,307.85 per ounce at some point during Tuesday. On a weekly basis, the price increased by 2.3% and ended trading at $1,304.41 per ounce.
One of the many options to invest in physical gold is through regulated entities who act as bullion service providers This could imply insurance, storage and security as there is regulation in both their internal and external auditing. There are options for an investor’s gold reserves to be stored together with others, or for their holdings to be stored separately (segregated) from others’ holdings and they could have the option to have access following a very short notice period. However, the option of investing in gold through CFDs puts aside any considerations of storage and can be made from the comfort of the trader’s sofa.
http://www.theweek.co.uk/gold-price/61682/gold-price-heads-for-1300-as-trump-poll-lead-sparks-panic
http://blog.gainesvillecoins.com/2016/11/02/gold-etfs-see-fresh-demand/
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