For the first time since June of last year, the price of gold has suddenly surged to almost $1,200. However, it’s not likely to get much higher than that this month.
Instability in the global economy is the biggest factor in the price increase. There is a lot contributing to this instability:
- The equities market had a sub-par performance for 2015
- Oil prices have gone down
- Uncertainty surrounding Federal Reserve interest rates
- Uncertainty in the Chinese Stock market
Other factors contributed to the price spike as well. An increase in gold prices close to Chinese New Year are not uncommon – in fact, a similar spike happened last year. But most of all, we’re seeing a textbook example of increased demand and “safe haven buying.” Investors are hedging their investments to offset the risks presented by a struggling global economy. Since gold is widely considered a safe investment, demand is up, and so are prices.
However, there is a limit to how much buyers are willing to pay before demand is affected. The current market consensus is that, barring some sort of market disaster, $1,200 is about as high as gold will get for now. With that in mind, right now would be a good time to sell. If you’re still waiting to get a better price, don’t forget that you can use our app to alert you when the market is in your favor.
