02 May 2018Reading time: 2 minutes
For a longer period of time the gold price is determined by several factors. First there are the geopolitical tensions worldwide, which have driven up the gold price during the past months. In turbulent times, gold is often used by investors as a save investment haven. Because of the plummeting stock prices, several investors decided to shift a part of their capital towards gold. It remains to be seen how the stock prices will develop in the coming months.

The second factor which has partly influenced the gold price, is the American dollar. The currency was supported during the past months by an increasing yield on US government bonds. This increase is due to the unrest about the growing US government debt and the inflation pressure as a result of the rising oil prices.

in the extension of the dollar lies the third determining factor for the gold price. This are the policies of the central banks. For one, the euro got weaker, because investors are anticipating on an accelerated ending of the stimulation program of the European Central Bank. The decrease of the euro resulted in a stronger dollar. According to the World Gold Council, the strengthened dollar is the most important reason for the pressurized gold price. They expect that this will also have a large influence on the gold price in the coming months. This might bring more clarity on which course the Federal Reserve could follow with their incentive policy. It is expected that the Fed might increase their interest rates step-by-step in the coming months but the speed at which this will happen partly depends on the economic growth in the United States.

In the past months the gold price was between USD 1,310 and 1,360 per troy ounce. Several analysts still see enough upwards potential for the gold price. Some analysts are even counting on an increase of the gold price this year towards USD 1,400 per troy ounce. However, there are also analysts who are more reserved. They believe that the gold price might fall on short notice as a result of the stronger dollar and increasing interest rates. The future price development is subjected to several political, industrial and sector specific, as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

Vontobel products on gold are tradable at DEGIRO.

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16/09/2019 00:32:47