While writing this article, the current price of gold is up more than $ 30 to $ 900 an ounce. At 12:18 p.m., the price of gold futures (for delivery in August) was quoted at $ 31.10. That's an increase of 3.5 percent! And if he manages to close the gold at that level would be the biggest percentage gain in 16 months!
Thus that is why gold is rising after since March, when the metal reached a record high of $ 1033.90 an ounce?
The Reserve Federal is all talk and no action
Yesterday the U.S. Federal Reserve keeps interest rates at 2 percent, but acknowledged that the expectations inflation is increasing. People are starting to worry that the Fed may be behind the curve. Expectations of a rate hike by the Reserve have declined Federal said they believe that inflation was likely to moderate later this year.
First, you have the Fed saying they are concerned about the inflation. But on the other hand, it seems that they will not "walk the path" and do something about it. That's why gold is going ballistic now.
Oil is on the rise
Another reason for the increase in gold today was the oil price. Today, that was to Algerian oil minister – Chakib Khelil – Come out and say on French television interview that Iran conflict could cause oil prices, which more than $ 200 a barrel. And maybe even as high as $ 400 per barrel! On that note, the price of oil rose to $ 138.95, which is just slightly below the record of $ 139.89 was established June 16. Why? As Iran becomes only the second largest producer of oil and OPEC's proven oil reserves owner. Gold reacted big to comments.
In a long term basis, the price of gold will go higher. Here's why:
- Gold usually purchased to protect against loss of purchasing power. The Federal Reserve seems to be suggesting that they are more concerned about protecting the economic growth U.S. weak and that inflation is the lesser of two evils.
- The best way to fight inflation through higher interest rates. Other central banks appear to be taking the increase in inflation more seriously.
- The dollar has fallen sharply since the Fed began aggressively reduce interest rates in If the Fed is seen as "behind the curve, the dollar will plunge further. This will encourage investors stocks and bonds and any of the foreign assets and hard assets like gold and silver bullion.
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“Gold will go to astronomic numbers” GATA on Russia Today Part 2
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