Gold Price Catching A Bid

A combination of global factors appear to be pushing some money back into gold. One is certainly the prospect of bondbuying by the ECB which has pushed eurozone bond yields to record lows. That has helped pull bond yields lower all over the world (including the U.S.). Falling bond yields help gold which is a non-yielding asset. Negative yields in Europe also encourage gold buying.

Another factor that may have boosted gold over the last week was the surprise move by the Swiss central bank last Thursday to lift the “cap” between the Swiss franc and the euro. That was done in anticipation of this week’s ECB accouncement which is expected to weaken the euro even further. The 20% jump in the Swiss franc (green line) sent shock waves through forex markets and may have pushed some money into gold as a currency alternative. Rising stock volatility during 2015 also increases the appeal of safe-haven assets like gold.

 

gold_price_21_January_2015

 

Courtesy: StockCharts.com

 

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