Gold has been having a great year so far. Its price has risen greatly in the past 12 to 18 months as a number of global uncertainties, find out more here, have led investors to flock to the precious metal as a safe option. Often when a commodity or currency goes through such a strong period of gaining in value, something will happen that brings it back down a few pegs. However, this is yet to happen for gold in its most recent surge, so it can’t be long before it stops rising. Can it?
The Brexit Effect
The value of gold was already increasing due to a number of factors, but Brexit significantly pushed it up. In the run-up to the UK’s referendum about its membership of the EU a lot of investors started buying gold in an attempt to safeguard their investments depending on the outcome.
The result was a surprise to many and the pound’s value dropped. The aftermath has led to a lot of investors’ lost confidence in the currency market, so many have left their investments in the precious metal. Even as things start to calm down, there is still some uncertainty surrounding the UK, its currency and the EU.
A year ago, Dutch bank ABN Amro was looking for just $800 for gold and today that has risen by around 70% as gold is now worth $1,300. RBC Capital Markets are now predicting that gold will be $1,500 per ounce by 2017, a massive leap in value.
Elevated geopolitical uncertainty, higher systematic risk and declining real interest rates are all what experts predict will lead to more investor demand. Therefore, market predictions for the future assume the value of gold will continue to rise in the foreseeable future.
There are still a number of political events that could see gold rise in value even further. While the UK’s political situation is a lot clearer at the moment, there is still the chance of a general election being called and all the negotiating involved with actually leaving the EU to be sorted out. This will likely result in more volatility and increasing gold investments.
Further a field, the USA has a presidential election coming up which always affects its currency value. While the continuing situation surrounding the economies of Greece and many other EU nations could see further changes. At the moment gold seems like a safe investment choice.
The truth is that the value of gold is going to keep growing in the near future. It is impossible to predict what will happen in 10 years but most specialists agree that this is the right time to invest in precious metals. Gold is an obvious choice because of availability and the really high demand that exist. There is not enough gold as demand at the moment. Whenever such a situation appears, it is a certainty that prices will go on until the lack is filled. You have access to so many different market opportunities and you can buy gold even online, through various brokers.