The price of gold passed the $ 1,300 an ounce for the first time since August amid expectations that weak global economic growth will lead to the introduction of new stimulus by central banks. Increased demand for safe assets has led to the rapid rise in investment in gold-backed funds in three years, and betting on appreciation of the metal are the highest levels in five months, notes Bloomberg.
Between December 2008 and June 2011 the precious metal rose by 70% in response to the Federal Reserve to launch a large-scale printing money to stimulate economic recovery. Over the past two years the partial tightening of monetary policy by the Fed and the increased risk appetite of investors led to a decline in demand for gold in 2013 the price collapsed by 28% and remained under pressure throughout 2014
Expectations the European Central Bank to begin its program of quantitative easing, and authorities in Japan, China and other Asian countries to introduce new measures against the economic slowdown again return interest assets such as gold, which offer protection against devaluation. While a strong dollar, the collapse in commodity prices and the weakness of most major economies around the world increase speculation that the Fed will delay further tightening of monetary policy by raising interest rates.
But gold also makes for a possibly good investment for those who seek to get a nice return on their investments. Short term investments in gold, however, do not tend to be as rewarding as other investments, since the price of gold is somewhat more stable than that of say silver, which rises and falls more often and more significantly.