Rise in Volatility has just put precious metals back in demand. As equity volatility persists, the price of gold has been unable to shrug off its correlation with the US dollar. Investors have now begun to look for safer options to put their money in.
The rise in the number of jobs in the US, as well as the government bond yields has had a direct impact on the price of gold.
However, as Greece still looms on the horizon and other asset classes offer very little protection, investors have turned their eyes towards gold and other precious metals again.
While the prices of gold and silver flirted with gains and losses this past week, the reason why gold is a popular choice is because it has been capped by gains made by the US dollar, a more powerful greenback is likely to push the prices of the gold bullion further downwards.
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According to the preliminary reports published by analysts, the rest of the year is looking very positive. As investors look for safe-havens, gold is shining more and more brightly.
As the demand for gold increases, the Federal Reserve may also raise interest rates due to the rise in inflation. Another major reason why gold is a popular choice today is because of the buying spree of the central bank.
The Russian Central Bank has been purchasing more and more gold in order to move away from its reliance on US dollar holdings. It is expected that this buying spree is going to play a major part in maintaining the price of gold for the year.
Inflow increase
According to ETF securities, the inflow in to gold related securities has increased significantly. For instance, investments in long gold ETPs have risen by $5 million in the past week alone. Other metals, such as platinum and silver have also risen in value significantly in the past week.
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