The increase in the value of the yellow precious metal is due primarily to increased volatility in the stock, bond and commodity markets. In such conditions, investors tend to rush into safe assets.
In addition, it is expected that the US Federal Reserve (Fed) may soften its mindset, it also stirs interest in gold.
Most experts believe that according to the results of the last meeting of this year, the American Central Bank will raise the interest rate by 0.25%. However, the question of what position the regulator will take next year is still open.
If the US economy continues to grow at the same pace, then the Fed will have no reason to continue to move away from the path of tightening monetary policy. In this case, investors may again turn away from gold.
Meanwhile, a slowdown in economic growth in the United States would have forced the Fed not to rush into a rate hike. A more consistent approach by the Central Bank to normalizing the policy would strengthen the position of gold in rivalry with such income generating assets as US Treasury bonds.
If at today's meeting, the regulator signals the continuation of monetary tightening, it will contribute to the growth of the dollar and cause a drop in the gold rate. The "soft" rhetoric of the Fed leadership may lead to a weakening of the "American" and a further increase in the price of the precious metal.
The material has been provided by InstaForex Company - www.instaforex.com