Gold (GLD) has been sort of mirroring the world economy lately – not much direction, a lot of hope, a lot of fear, but in the end … not much movement. Gold, which was heading toward $2,000 an ounce a year ago, as dropped back to the $1,500 range and hasn’t fluctuated much in the few several week sand months, mostly based on the debt crisis in Europe, the monsoon season in India and the U.S. unemployment numbers.
All three facts are given mentioned in a recent article about gold commodity trading. As gold (GLD) has basically hovered between $1,600 and $1,650 an ounce, many investors have been waiting to see how other factors in the economy play out. But there is talk that gold might be ready to make another run. With the European Central Bank not being very aggressive in handling the debt situation, there is still some uncertainty as to whether Europe will stabilize. If the ECB does not take action ad the region gets more volatile, investors could wind up safe-harboring their money in gold or silver.
Another factors that has played a role in gold prices has been the monsoon season (or lack of one) in India. India is one of the largest gold-consuming countries, and the country is going through a very weak rainy season – so much so that certain parts of the country may enter drought conditions. India’s rainfall total this year is about 20 percent below its 50-year average, and possible drought will adversely affect gold consumpion as the focus would turn to food and survival.
The third factor (well, besides the usual rise and fall of the dollar in comparison to other currencies) in gold (GLD) prices has been unemployment in the U.S. While private companies added jobs this past month (about 60 percent more than expected), the unemployment still ticked up slightly to 8.3 percent. Continued weakness in the employment market will also drive demand for gold and demand for safe-haven assets.
However, some analysts believe this might be the time to get into gold (GLD) – this might be the low point for the commodity, and factos in the world economy may dictate a very rapid increase in price over the coming months. Certainly these factor are temporary and will work themselves out, but uncertainty in the economy seems to breed certainty in the calls for buying precious metals.