Gold Price Outlook: Mired in a World Worsening Recession, the global gold market is poised for a decisive shift away from current downward trends as U.S. Federal Reserve officials, having watched the historic collapse of house prices in the United States, contemplate a second round of quantitative easing. The European Central Bank is preparing to embark on a program of low interest rates and wage cuts in an effort to stimulate global growth. Meanwhile, Asia’s most powerful economy, China, is in recession itself, with market turbulence indicative of the pressures exerted by its massive stimulus efforts. In these circumstances, many in the financial community are publicly concerned that a further fall in gold prices may be inevitable. In light of this, what can be said is that gold investors will need to brace for a period of time while global markets volatility ameliorates. Meanwhile, stockpiling remains a key strategy for long-term investors in the precious metal.
Gold Price Outlook: Despite the global economic uncertainties, there are signals that the global economy will remain resilient this year. The currency markets around the world have stabilized after some turbulence last quarter. The U.S. Federal Reserve is widely expected to announce another rate reduction later this year. Japan and Europe have signaled that they are prepared to proceed with rate reductions of up to 50 basis points. The spectre of a global recession is slowly fading away. This uncertainty is likely to bring about a continuation of the present trend in gold investment, as investors seek a safe haven amid rising stock markets and rising inflation in the United States.
Gold Prices: The global economy’s weakness has triggered a sharp spike in gold costs worldwide. In response to this, Asian refiners have introduced further discounts to shore up their balance sheets. These actions are being taken in the face of falling demand for the precious metal, which is increasingly dictated by the rapidly declining profitability of refineries and mining operations. In addition, as the U.S. economy heals and strains dissipate, the U.S. dollar strengthened against the currencies of its main trading partners in the last few months, further strengthening the dollar and making the currencies of these countries more vulnerable to depreciation.
The spot price of gold has dropped by nearly 25 percent since hitting a five-month low in November. In the same period, global crude oil inventories have continued to increase. Both the U.S. and European economies are battling to keep their financial infrastructures balanced. Uncertainty over the direction of the U.S. Federal Reserve continues to weigh on global markets. The uncertain outlook is depressing investors’ confidence in the ability of global central banks to maintain their accommodative policies despite signs of a weakening global economy.
Nevertheless, a bullish market is also developing in Asia. The strong global economy bodes well for the Asian economies, which have recently begun to recover from recession and are now enjoying robust growth. In addition, a number of market analysts have noted that a rise in the value of the U.S. dollar could weaken the British pound and Chinese stocks (an act that eventually led to a 20 percent appreciation in the Chinese share market).
Gold prices are likely to remain on an upswing even as the global economy takes time to bounce back from the global debt crisis. With gold prices expected to rise in the coming years, investing in gold has become a more attractive proposition. For investors who already have a substantial physical gold investment portfolio, it may be time to diversify and take advantage of short-term market advantages. This will help you ride out any turbulence in the financial markets and hopefully maximize your gold profit during these rocky times.
Nevertheless, for investors who do not have significant gold assets but are concerned about the global economy and its prospects, a more defensive approach may work better. A combination of safe investments like precious metals and safe savings accounts would be a good idea. It is important to keep in mind that even with a strong economic recovery, the global economy is likely to experience a slowdown or recession at some point. Therefore, you may want to diversify your investments in order to protect against a sharp downturn. If the global economy continues on its current trend, then gold price is likely to follow suit.
There are many ways to invest in gold, both with and without the added benefit of diversification. Investors can purchase gold bullion, coins or jewelry. Gold is also a good alternative investment to the traditional stocks, bonds and mutual funds. As gold prices rise, you will also benefit from the positive cash flow and the potential to increase your wealth. The best way to determine the gold price outlook is to determine how much physical gold you currently have on hand and compar