For more than 2 weeks now, the gold price has been on a steady uptrend after volatility in world stock markets, and in particular, the US market which has caused investors to seek out gold as a safe haven and according to some analysts, this will be the key driver of the precious metals as the year comes to an end.
The Dow Jones index, which some say is the world barometer of financial markets has seen extreme volatility in recent weeks which has rattled traders and lest the market worrying whether this is some short term issue or should we prepare for more.
"There are two camps diverging around the likely performance of the stock market, particularly in the short-term which is creating a push and pull for the gold market where we have seen some interest return on the back of those losses," said Daniel Hynes, an analyst from ANZ bank.
"But the flow hasn't been completely one-way and there is still some caution around the sell-off being potentially short-lived. And that has resulted in investors not fully switching out of equity markets into gold." He added.
A number of other risks related to financial stability are currently out there such as Brexit negotiations as well as the US elections due next month and this may further underpin the gold price and depending on the outcomes, give it a significant boost.
"Gold prices are still below where their fundamentals justify, especially if the current shift in risk appetite is sustained," said Christopher Louney at Royal Bank of Canada
"There is no shortage of geopolitical concerns, Italy's indebtedness and lack of a viable budget, uncertainty around Brexit negotiations, uncertainty around U.S. policy following U.S. Midterm elections are some of the risks," he added.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 58% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
IMPORTANT: Please be informed, that our services are available for Professional Clients only. Our website is currently under review for the implementation of the correspondent amendments.
|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.|