Gold Prices Hit One-Month High After Chinese Crisis’ Breakout
Investors, mostly at the Asian markets, are worried about the actual China’s situation. There is too much uncertainty on the air. This financial crash is now supporting the gold prices. Because the ‘safe-haven principle’ that gold represent is been following by traders properly.
More recently, the People’s Bank of China (the Chinese central bank) devalued the Yuan three times in a single week. That decision was taken in order to push forward the international commerce and make some growth in the short-term.
In this panorama, financial media is not optimistic. The Chinese crisis is not going to get softer any time soon. In fact, there are possibilities of a contagion effect, due the great influence that the Chinese economy has over tens of other countries. Even solid economies, as the United States one, could feel the impact.
Against all the odds, the everyday-stronger US Dollar is avoiding an even faster gold prices rise. Some investors only can see viable investing on the American Dollar, instead of a precious metal that doesn’t offer any return.
Also, the high value of the US Dollar is making even more expensive the gold of investors overseas, due the commodity is quoted in this currency. That means that a growing Dollar will keep suppressing the gold prices without a chance.
Despite this, the FED’s declarations about discarding an interest rates’ increase in this year’s September was a key reason for the recovery of the precious metal. Most traders were betting in favor of the Dollar thanks to the expectation of an important interest rates’ increase. Shortly after these mentioned declarations, gold purchases triggered in an important way.
Now, reaching USD 1131.90 per ounce, the precious metal achieve a one-month high after months of many relevant losses and criticism. US Gold futures for December also reached the USD 1127.90 mark. This kind of event is the main proof of the “gold price cycle” commented by many experts in the commodity. Today there is more betting in favor of the precious metal.
The main reason can be the negative panorama involving several crises all around the world. Crises often banish currencies value in no time. Gold has proven through centuries that there is no crisis capable of hurting it. That why it is the perfect choice for storing wealth during difficult times.
Other precious metals obtained important gains too: Platinum went up 1.7 per cent to USD 1007 per ounce and palladium gained 2.1 points to USD 606.72 per ounce. Related to this good news, there are others not so good. Glencore, miner and commodities trader posted a 29 per cent drop in the first semester earnings.
Before that, there stated that they were considering shutting down their Eland platinum mine in South Africa, due the low prices of the precious metal causing highly elevated costs.
If prices keep in the same direction, Glencore could recover in no time. High costs combined with really low prices in the past months has hurt in an important way the industry. Now, due many financial changes on sight, metals are gaining back some terrain.
Gold is far away of its 2011 record high at USD 1826.80, but now the recovery is imminent. Investors should pay more attention to it. The fact is that making real gains with gold is tough and requires a lot of patience but it should be seen as a way to back up private wealth and being safe during uncertain times.