The day before many Americans celebrate Thanksgiving, investors and gold owners from all around also have something to be thankful for and that is a seemingly ever rising gold market.
For weeks now we have seen the price of gold increase dollars each day with no end in sight. Today was no exception. Yesterday, gold closed at $1,168.20 an ounce and as the market comes to an end today gold is up approximately $25 an ounce hovering around $1,191.
Just when the staff at Healthy Financial Habits believed that the gold maret was in for a correction the International Monetary Fund announced that they will sell 10 metric tons of gold to the central bank of Sri Lanka today. India also stated that they may be purchasing even more gold to add to their purchase of 200 metric tons earlier this month. As more gold comes off of the open market the supply is shortened. Simply stated, gold prices will rise with a shorter supply and a higher demand.
When individual investing countries such as Sri Lanka and India buy large quantities of gold this signals that it may be a great time to buy. People believe that if banks are making decisions to purchase gold right now then it only makes sense to do the same.
As fears of inflation continue to brew in the United States more and more investors are turning to gold as a hedge against inflation. Today the United States dollar hit a 15 month low when it was revealed in the US central banks minutes that they consider the decline in the dollar as orderly. When they use the term “orderly” this indicates that they are content with the direction that the dollar is going and do not plan on doing anything about it.
The dollar is measured using the dollar index. The dollar index (DYX) weighs the greenback against a basket of 5 other currencies from around the world. The DYX is currently at $74.28 down $.79 and sitting at 15 month low.
Last week we heard a rare statement from Ben Bernake, the US Federal chairperson, indicating that the Federal Reserve was paying close attention to the US currency but did not indicate any action. We were told this week that interest rates will continue to remain low. Today we learned that the US central bank believes that the dollar is orderly.
Many people are losing faith in the dollar as the federal government is taking a hands off approach to the declining dollar. This raises fear of inflation and causes people to convert their cash to gold in order to protect their money against inflation.
Check back with Healthy Financial Habits every Monday morning for your weekly gold price predictions. Here you will find current news, information and investment strategies that will assist you in making financial decisions. It is important to remember that consulting with a quality financial advisor is always recommended prior to making personal financial decisions.
Author: Allen Dukes