Many financial media reporters across the world are predicting that Gold prices will break the $1300 value by the end of the first quarter of 2016. Gold has already risen in prices by as much as 20% since the beginning of 2016, and financial experts believe that this rise is an indication of financial market turmoil, with emerging markets bearing most of the fallouts in the price increase. Most Gold RA companies believe there are numerous factors accounting for the unprecedented Gold price increase but the prominent of these factors are; Inflation, Global crisis, The strengthening of the value of the US dollar, the declining interest rates, Quantitative easing or buying of more securities by the Central banks, and the instability between the supply and demand of the commodity.
The financial implication of increasing prices of Gold are quite enormous, for instance, increase in Gold prices may force interest rates to increase, as more investors will end up selling more Gold to free up some cash that can be invested in some other things. If interest rates decrease , especially in emerging markets , Gold prices will rise, because there will be a lower opportunity cost for investors holding unto Gold, when there are other investments that will be more profitable. This also means that low interest rates in Gold supplying countries will attract more attention to Gold.
Gold IRA companies also believe that continuous increase in Gold prices will further cause instability in Central banks, across the world. Irregular policies on world economies (most especially in developing and emerging economies), will make the purchase or investment in Gold , a safe business investment . as people flock to buy more Gold there will be more uncertainty in world currency exchange rates . As world central banks try to protect wealth through deficits, most business investors will naturally prefer to hold unto tangible securities such as Gold.
The April 2016 rate hikes that will likely come into effect in the United States of America may likely cause a slight stability in the prices of Gold, if not lower it- this , according to Gold IRA companies, may push the prices of Gold to $1,240.30 an ounce. Similarly, Gold IRA companies are speculating that an increase in Gold prices may cause a sharp decline in the value of the US dollar, and by extension other world majors. The US dollar remains the world's dominant currency reserve, and the currency has an inverse relationship with prices of Gold ( as the strength of the US dollar increase, prices of Gold decreases. The financial implication of the relationship between US dollar and Gold means, more people may likely sell Gold when there is a decrease in the value of the US dollar, while more people will buy the commodity when the strength of the currency increases.
According to Gold IRA companies, a strong US dollar is definitely a strong indication that the market will favour the buying of Gold , and selling of the commodity at such point in time is definitely a bad investment choice.