Gold prices shifted up and down this week due to various market factors. Overall gold started to stabilize in the past couple days around $1,390 per ounce. Here is a look at two recent stories that may shape the future of gold in the coming weeks.
Production in China Slows
Gold prices had help breaking out of their lull this week thanks to reports that manufacturing in China has slowed. If indeed China fails to meet certain production demands in the coming months then it may mean higher demand for gold. This would be the first time in 7 months China has slipped on their manufacturing numbers.
This underwhelming news often drives investors to look for safe haven investments to ensure their wealth is protected during slow production periods. If China continues this trend for very long, it may mean good news for gold.
Bernanke and Further Quantitative Easing
The Federal Reserve’s chairman Ben Bernanke recently stated the massive economic stimulus program would not come to an end any time soon. The Fed has been going strong on its monthly commitment to buy $85 billion worth of bonds every month. This round of open-ended quantitative easing was once thought to be slowing down a few weeks earlier when gold posted its substantial drop of over $100 per ounce.
Unemployment has also been an issue. Unemployment rates have been improving slowly, but not enough to call off the stimulus efforts. Bernanke stated, “…nearly 8 million people are working part time even though they would prefer full-time work.”
This could be a sign that the U.S. economy is not out of the woods. If Bernanke feels further economic stimulus is needed then it’s apparent the U.S. still has a long way to go. As further currency debasement takes place its typical to see investors seek to preserve their wealth by purchasing precious metals.
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