Gold prices rise as investors worry about falling oil prices
Posted on: 25/Feb/2016 11:19:03 AM
On Wednesday the price of gold went above $1230 an ounce. This acted as foil against risk as the fall in oil prices took the world by storm recently.
The price of an ounce if spot gold costed $1235.64, a rise of 0.7 percent. In the previous session, spot gold gained 1.5 percent.
According to analysts, The market`s rediscovered role as a shelter for risk-averse investors seemed to be gaining traction. Gold is rising on the back of weak risk appetite, but what stands out today is that the market is rising even though the dollar is higher as well. We`ve definitely reached a new range above $1,200 due to re-pricing risks of Fed rate hikes. Further sustained gains may be capped until the path for monetary policy is clearer. Technically, gold looks set to test recent highs at $1,240 and then a one-year top of $1,260.
This year, gold has gained about 16 percent so far. Say bankers, Turning to U.S. monetary policy, prices for U.S. fed funds futures suggest investors see little chance of any increases this year. The sustainability of gold`s rally comes down to the Fed and the market pricing in only one or no rate increases this year. The Fed may need to keep U.S. interest rates unchanged for an extended period to give inflation time to rise back to the central bank`s 2 percent target.
