There haven’t likely been more catalysts in gold price today than there have been over the last 10 years. This has almost created a perfect storm that has seen gold prices rise, even though they’re not valued at their previous record high.
The underlying fundamentals of gold remain the same. This means that support for rising gold prices will continue to be in place for some time. But, it’s still debatable and uncertain how long.
Federal Reserve and Gold Prices
The Federal Reserve is probably the most important catalyst. The Federal Reserve is the institution that has driven investors and investor interest to gold more than any other. This commitment by Chairman Ben Bernanke, that he’ll continue printing money, buying bonds, and implementing quantitative ease, all of which are basically identical and lead to the same result.
This ultimately leads to the devaluation the U.S. currency and the creation of an unsustainable amount of debt.
Even if quantitativeeasing were stopped immediately the consequences of Fed actions would remain for years and years.
It’s the combination, along with the increasing debt levels and the debasing U.S. currency that makes the current rise in gold-priceds so important.
Low interest rates are another major factor in supporting gold’s prices.
This is close behind the Federal Reserve’s actions on why gold has risen in value. Once again that is attributable Ben Bernanke. Bernanke said that they won’t raise rates so long as the economy’s weak. Contrary to some economic reports the truth is that the economy continues to be a disaster. Bernanke cannot raise interest rates anytime quickly.
As long it remains so, gold will remain supported.