There's some irony in being happy about a bull run in a gold prices forecast, because it usually means a lot of other people are going to be miserable. This is because gold (Au) as an investment is a safe harbor. It is a refuge for investors abandoning their regular portfolio when the markets are in turmoil.
Unlike oil, production bottlenecks and mining problems don't have that much impact on the global price of the metal. On the other hand, the state of the stock market makes a big impact, and so do central bank rates and the U. S. Dollar value. Jewelry market changes can likewise have a considerable effect on the price.
A full 27% of the global consumption of Au for jewelry, teeth and other industrial purposes happens in India, with China and the U. S. As the second and third largest markets. Needless to say, market demand and policy changes in these three countries make a big difference on the global level. But this impact is still nothing compared to what the stock markets cause.
In a down economy, when stocks, real estate, mutual funds and bonds are tanking, investors bail out and head straight for the metal. It figures, therefore, that Au tends to go a bull run when the Dow starts dropping. It's not just a coincidence that gold has been hitting record annual averages every year for the past 11 years, all the way back to 2001.
Investors started hoarding the precious metal after economies all over the world went into shock due to 9/11 and the dot com crash. The slide continued unabated all the way into the housing bust in 2007, followed by the Great Recession in 2008 and 2009. The peak came 10 years after 9/11, when the Au price hit $1,920.70 on Sept 6, 2011.
The economy has since recovered, jobs data is optimistic and the Dow is closing in fast on 14,000. The gold prices forecast is not going to be as bright as it was in the past decade. Even so, analysts estimate that the annual average price is unlikely to slip below $1,400 this year or any time soon.
Unlike oil, production bottlenecks and mining problems don't have that much impact on the global price of the metal. On the other hand, the state of the stock market makes a big impact, and so do central bank rates and the U. S. Dollar value. Jewelry market changes can likewise have a considerable effect on the price.
A full 27% of the global consumption of Au for jewelry, teeth and other industrial purposes happens in India, with China and the U. S. As the second and third largest markets. Needless to say, market demand and policy changes in these three countries make a big difference on the global level. But this impact is still nothing compared to what the stock markets cause.
In a down economy, when stocks, real estate, mutual funds and bonds are tanking, investors bail out and head straight for the metal. It figures, therefore, that Au tends to go a bull run when the Dow starts dropping. It's not just a coincidence that gold has been hitting record annual averages every year for the past 11 years, all the way back to 2001.
Investors started hoarding the precious metal after economies all over the world went into shock due to 9/11 and the dot com crash. The slide continued unabated all the way into the housing bust in 2007, followed by the Great Recession in 2008 and 2009. The peak came 10 years after 9/11, when the Au price hit $1,920.70 on Sept 6, 2011.
The economy has since recovered, jobs data is optimistic and the Dow is closing in fast on 14,000. The gold prices forecast is not going to be as bright as it was in the past decade. Even so, analysts estimate that the annual average price is unlikely to slip below $1,400 this year or any time soon.
Gold Prices Forecast And Trends
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