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Gold 2015: factors that influenced the gold price in the previous year

Gold 2015

Last year ended for investors with some good news.

Due to the reduction of economic growth in China and problematic situation in the Middle East the price of gold and some other materials rose on worldwide markets.

The increasing of the price was boosted to 2%, and at the end of the year the price for an ounce was almost $1,080.

Newmont Mining Corporation that provides gold to investors had seen a rise of its shares for 3% and became one of the leaders in Standard & Poor's 500 index.

Indeed, Newmont Mining Corporation was one of 23 stocks in that ranking who bounced up significantly, because the majority of other companies were oil companies.

The shares of Goldcorp, Barrick and Randgold together with Newmont Mining Corporation also have been boosted up to 3%. And all these companies are a part of the the Market Vectors Gold Miners.

There is a tendency that when all prices of the commodities are falling down, the price of gold is rising. The yellow metal is often sold well when hard times come. The same was in 2008.

Gold 2015 - factors that influence gold price

The situation between Iran and Saudi Arabia is alarming. In addition the melt-down in China makes the situation worse.

Ex-chairman of the U.S. Mint and main strategist for Fortress Gold Group Ed Moy expressed his thoughts that the situation on the gold market is overblown.

And therefore CNNMoney's Fear & Greed Index, which is monitoring situation in the investor’s sphere shared the worries of Ed Moy.

There is a question will the fear control the market in 2016. If it will be confirmed it would imply run of good luck for investors in gold.

Gold price tanked more than 10% in 2015 and have fallen for about 45% from their maximum $1,900 (without inflation) an ounce in the autumn 5 year ago.

Back then providers of capital were concerned about condition of the market in the USA on the morrow of decline of credit surveillance of S&P.

Ed Moy thinks that the price will not rise as much as in 2011. Although he made a suggestion that by December 2016 gold price may get close $1,200 to $1,300 an ounce, meaning a hefty 10-20% increase.

Worries about a slowdown of international economy still remain as a fact.

The price of gold has been falling for a long time and now after all the difficulties it has reached its minimum. It seems that the $1000 barrier will not be breached.

But there are two arguments why the situation on the gold market will be bad. The prediction for gold is not that good. Government rate hikes are expected to influence that.

These sovereign rate hikes lead to bigger investments in bonds and stocks and less in gold. The inflation rate around the globe is not high. Inflation doesn’t make a great impact on gold, but it can exert an influence on the value of paper money. The interesting fact is that prices of Bitcoin went up too.

Quite apart from the fact that inflation remains low and rates are going up, the gold price will continue to show sustainability prices despite tension in China and the Middle East. Jack Ablin, main investment officer from BMO Private Bank said that the slow down of Chinese economy can influence that. And further complicated relations between Saudi Arabia and Iran remain unpredictable.

By Chieffinancing 25.07.2016

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