Gold is on the rise since last year. Gold gained 30% in 2007 and it tripled in value during the last seven years. In the recent times, the main reason the “yellow metal” is so attractive are the Fed’s interest rate cuts due to a slowing U.S economy. That trend may be kept since a 50 basis points cut seems a must on the March 18th FOMC monetary policy meeting.
What can investors expect in the near future? Uncertainty. Even though, another interest cut in the U.S would weaken the USD, which in turn could make gold more attractive to investors, prices might not remain so high in the long term. Higher prices seem to decrease demand as the India example shows (a 7% decline in demand only in January). Investors need to be careful. As the 950 USD – 960 USD level seems achievable, a correction is expected.
Adam Narczewski  |
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