Prices of gold broke past the $1,500 mark late Wednesday to 6-year peaks, despite US investors' worry about what the results of the Federal Reserve's meeting would be, and the state of the global economy that made them seek for safe-haven cover.
Spot gold climbed 0.6 percent higher at $1,526 an ounce, with Wall Street analysts linking the rally to profit-scheduling after the yellow metal's solid momentum last week when it increased more than $80 for the month. US gold futures likewise moved up 0.5 percent to $1,518.69.
The precious metal rose 0.82 a cent late Tuesday at $1,515 an ounce, with market prices in Dubai hitting DH181/gram for 24-carat gold. Gold is seen to rise further in the next few days due to worries of a looming recession, or at least a weakening in global markets.
According to Jigar Trivedi, a market analyst at Anand Rathi Stock Brokers based in India, "the market is nervous" while investors brace for further signals on the result of the Federal Reserve meeting. However, Trivedi noted that the core value of gold remains strong as central bankers have hiked their gold stockpiles in the midst of "geopolitical tension, trade discords, and signals of a stimulus."
A number of market forces influence the price of gold, including the economic tussle between Beijing and Washington, Britain's possible abandonment of the European Union, as well as a host of problems from other major economies.
Weak markets in some countries likewise force central banks to slash interest rates, devaluing major currencies and thus pushing demand up for gold -- which has time and again been looked up to as an asset of safety, especially during turbulent times. "People invest in the yellow metal, and that leads to higher prices," Tushar Patni, UAE-based Ajanta Jewellers director for marketing, said.
Despite this, the primary trend stays on an upbeat trajectory, with more advances in the medium-term, while in the short-term the outlook is "lateral, with prices that could attract a range between $1,485 and $1,530," market analysts said. The more the market becomes uncertain, the better the market appeal of gold becomes, investors said.
In the global market, the gold price is measured by supply and demand. Bigger demand pushes gold price to soar, and vice versa. Demand has been on the rise in the past weeks, causing an increase in prices. Gold is up in value by almost 20 percent since January, this year.
