Gold had an astonishing day yesterday when it made an unbelievable leap to a new record high of $1174 an ounce before settling at $1163 an ounce.

As you know, gold has been on the rise for some time now. In fact, the precious medal has increased in value an amazing 32% this year alone. Lately it seems as if any bad news concerning the United States economy has an extreme effect on the price of gold.

This is exactly what happened on Monday. The dollar index fell yesterday after two announcements that were made. Both announcements painted a gloomy outlook on the US economy.

A government report showed that the US economy grew slower than expected in the 3^rd quarter. Third quarter growth reached 2.8% which was significantly lower than what economist expected.

Another factor that caused the price of gold to increase was an announcement from Federal Reserve officials stating that they expect interest rates to stay low for some time now. Lower interest rates devalue the dollar ultimately having an effect on the price of gold.

The equation for gold prices is fairly simple. As the value of the United States dollar (the “Greenback”) decreases gold moves in the opposite direction. The greenback is measured against other currencies from around the world using the dollar index DYX. With a slowing US economy any news good or bad will have a dramatic effect on the price of gold. In simpler terms, as confidence in the US dollar decreases the price of gold increases.

Gold us currently up $4.50 per ounce from yesterday at $1168.80.

Visit Healthy Financial Habits daily for up-to-date news and information on gold prices and other commodities. Here you will find all the information you need in order to guide you while making investment decisions.  Check back every Monday morning  for weekly gold price predictions.

Author: John Zinsky