According to investors, the U.S. economic health is often reflected in the price of gold. When gold prices are high it signals the economy is not healthy. Why?
Well, investors purchase gold as protection from either an economic crisis or inflation. When investors think the economy is doing well, they will buy less gold, driving the price of gold lower. Savvy investors monitor the price of gold very closely.
The first week of September has seen gold hit a new two-month low. Does this signal the economy is doing well? According to CNBC, portfolio managers see a rebound coming soon. Chad Morganlander, portfolio manager at Stifel Nicolaus, states, “We believe that it will continue to go higher and for the short run.” Furthermore he predicts gold to have an annual return between 4 to 6 percent over the next five years.
What could be attributed to the rise in gold prices? It seems the weaker-than-expected U.S. employment report on Friday is driving gold prices. The dollar-denominated gold commodities have obviously found support from a slightly weaker dollar as investors lowered their expectations about the timing of the next rate increase, stated by Resourceinvestor.com.
Yahoo Finance interviewed Fed Chair Janet Yellen who said on Friday the case for higher rates was strengthening, while Vice Chair Stanley Fischer later suggested a hike could come as soon as September. Fischer added in an interview on Tuesday that the U.S. job market is nearly at full strength.
Now’s the time to watch gold commodities; timing is important to get the best return on your gold metal scrap.
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