Gold breaks through $1,100 – But will it hold?
By Peter Walden, News Editor
08 Jan 2016
The gold price has made an impressive start to 2016 and broken through the psychological $1,100 barrier. Gold is the ultimate safe haven asset and rallies during times of financial and geopolitical turmoil.
Gold has surged over 5% since the start of the year and broken free from the $1,070 - $1,080 trading channel which it had been stuck in for some time.
The price surge can be attributed to the ongoing turmoil in the Chinese stock market. China’s stock market has been suspended twice this week after falling over 7%. The falling value of the Chinese Yuan is also unsettling investors. Since the 2008 economic crash China has been the main engine of growth and any slowdown will have ramifications throughout the financial markets.
Geopolitical risk in the Middle East is on the rise and North Korea are once again flexing their muscles. If these trends continue the gold price should continue to rise.
So can the rally continue? In 2015 the gold price was slammed on the expectation the Fed would finally start to normalise interest rates after 9 years of near zero rates. With stock markets under pressure and economic data worsening many are doubting if the Federal Reserve will be able to raise rates further in 2016. Should his be the case gold should outperform traditional asset classes in 2016.