Gold prices are on the rise, and it broke nearly six years old record. Right now, the price of spot gold is $1,405 per ounce. Expectations are high that gold prices will reach even better results. There are various reasons why gold prices broke this record. We will discuss a couple of them.
The U.S. Federal Reserve meeting which ended two days ago is an event. A lot of analysts and investors watch closely to see what is happening at these meetings. Federal Reserve decided not to change the current interest rate. However, they decide that one or two cuts will occur in 2020. Market reaction to the meeting was that the gold value increased by 2.2% a day before this announcement.
Possible risk factors
One of the significant problems which directly affects the gold prices are governments with are overprinting their currencies. The negative side of this decision is the debt levels which their economies unstable. What comes to mind is Venezuela, which has an inflation rate skyrocketed during the last several years. Venezuela is just the tip of the iceberg. Another South American country is Argentina, followed by other countries. Unfortunately, governments around the world are not doing enough to stop these practices before their countries have similar problems as in Venezuela.
The problem is that the amount of gold bought by four countries, China, Turkey, India, and Russia is exceeding the annual production. Central Banks are buying more gold to increase their gold reserves as a backup plan in case of the possible economic problems. The situation is hard not only because the demand is rising. Additionally, primary producers of gold reserves decreased by 26% since 2012.
Silver price updates
The gold is not the only precious metal which gained from the uncertainty of the global economy. Silver is another commodity which is rising thanks to the favorable conditions. The fall of the U.S. dollar and the market reactions on the Federal Reserve’s meeting had a positive impact on the silver price. The price of one ounce of silver is $15.31. The forecasts are that it will reach $15.50. The silver price will grow because the overall feeling on the market is positive, and this trend will persist for several days.
Spot gold and silver prices are increasing due to demand and global economic problems. Investors from different countries are investing in these commodities as they provide lucrative alternatives to other sectors. Gold price not only broke the record but will continue this positive trend for the upcoming days.