Monday, May 08, 2006

What Is Driving Up the Price of Gold?

Interesting Article:

What Is Driving Up the Price of Gold?
Emilie Rutledge

Last week, oil has been trading at historic high prices, and oil futures on NYMEX have closed at over $75 per barrel. We have passed the northern winter spell, and have yet to move into the US driving or hurricane seasons. At this time of year, oil prices usually tend to dip in line with reduced demand, but this is clearly not happening.

If you factor in geopolitical concerns, such as instability in Nigeria and uncertainty over America’s intentions toward Iran, oil prices still have the capacity to rise further in coming months. China’s and India’s meteoric growth will mean that demand for oil will remain strong even if prices rise higher.

On a similar trajectory, gold prices have also been rising, and have increased by over 20 percent so far this year. Gold prices touched $680 per ounce last week, their highest levels since November 1980. Gold tends to be seen as a “safe haven” for investors when they fear other monetary assets will lose value, often because of inflationary pressure or threat of war...source

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