The gold price remains stable and relatively unchanged today, hovering around the $1,237 mark, having made a remarkable recovery since November and some are predicting that the rally still has a long way to go.
The reason behind this prediction is the US stock market, which is sitting at record levels on the back of US president Donald Trump’s proposed policies such as personal income tax cuts and a huge reduction in corporate tax.
The fear in the market is that if Trump is unable to deliver on his promises the stock market will tumble, and it seems as if investors are moving into gold at the moment in anticipation of this.
"It’s very interesting in my eyes that investors continue to be enticed towards gold, regardless of US stock markets maintaining their positions around record levels” noted Jameel Ahmad, vice president of market research at FXTM
"Of course dollar weakness helps gold, but I am just wondering if investors are hedging towards the precious metal as a result of questions remaining in the background as to whether this stock market rally can really continue." he added.
The possibility that the US federal Reserve may hike interest rates next month would usually put pressure on the gold price, but with Brexit approaching and the possibility of Eurosceptic candidates coming to power in Europe the market seems to be turning a blind eye to the Fed,
"It's a tug of war between a higher probability of a US rate hike in March and upcoming elections around Europe, which are creating uncertainty and demand for safe assets," said Jens Pedersen at Danske Bank.
Risk warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, your level of experience and preparation of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|