By Max Clarke
Gold prices topped $1,850 for the first time this morning amidst continued concerns from traders of the stability of US and European banking institutions.
“Gold is a rocket ship at the moment and there are many factors that make us expect further gains,” commented the chief economist at World First forex brokers’.
“Firstly, the global recovery has juddered to a halt and, with the obvious uncertainty surrounding the situation, people have been looking to buy tangible assets.
“Secondly, we are likely to see inflation remain high and with the prospects of further quantitative easing in the UK and US this will translate to an increased erosion of the value of money; something that gold investors tend to crow about…”
The Bank of England have alluded to the prospect of increasing their quantitative easing programme in which the Bank purchases debts of other financial institutions serving as a cash injection into the economy. While this can foster economic growth by making banks more willing to lend to businesses, it carries a high risk of boosting inflation. Further devaluing of sterling would prompt traders to buy gold as a stable investment.
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