Due to the slowdown of hiring within US shores, Gold investments have increased to a three-week high with anticipation that the Federal Reserve will sustain its more than $80 billion monthly stimulus package until December.
According to WA Today, the most actively traded gold contract due for delivery at the end of the year settled at $1,342.60 per ounce, a 2% increase of $26.80, reaching an all time high since September 19th. Bullionvault.com’s data showed that gold’s value rose to 4% last September 19th and settled in at $1,364.10, the largest increase the commodity has seen since January 2009.
It’s not surprising to see gold prices soar, since businessmen see the commodity as a hedge against a weak labor force. Since the Federal Reserve is showing no signs of slowing down its ludicrous bond-buying program, analysts foresee that gold’s prices will keep on rising in the coming months.
While the stimulus package is seen as a solution to the increasing debt of the US, analysts have long been cynical about its long-term effects. Even if it can have the positive effect of increasing jobs within a country, cashing out more than $80 billion a month could lead to inflation and further weaken the dollar against competing currencies. Just this month, the Fed’s aggressive bond-buying program led to a 2-week shutdown of the US government.
“I think that the realities of the situation are starting to set in,” said Bob Haberkorn, a senior commodities broker for RJO Futures. “The likelihood of the Fed ending easing this year is off the table right now.”
Meanwhile, in European shores, gold had also seen an increase in price this week. The precious metal’s value in London rose to €964 (approx. $1,330) in Tuesday, a €7.26 (approx. $10) increase in gold’s worth per ounce.
As of 5 PM Tuesday, gold’s price settled at $1,339.32.