Current gold prices have been increasing steadily over the past few years. Investing in gold carries with it some level of risk, just like investing in stocks, bonds or any other vehicle. The prices can change from day-to-day with decreases as well as increases. Investors should check prices daily, but not be too concerned if the price decreases a little. This is normal in the market.
If you look at the current gold prices and compare them to what they were one year ago, or even five years ago, the price has steadily increased. There have been some drops in the price. But if you had invested in one ounce of gold back in 2006, the price was about $568 an ounce. The price of gold today is about $1350 an ounce. That is about a 137 % return on that investment. How much longer the prices will continue to increase is hard to determine. But there are several factors that help drive the current prices of gold.
One factor that most investors keep an eye on is inflation. As inflation increases, the purchasing power of the dollar decreases. But by investing in gold, the value of the dollar is secure and unaffected by inflation. Inflation will actually cause the price of gold to increase, as more people want to invest part of their portfolio into gold during times of high inflation.
Another factor that is being watched closely is the decreasing value of the Euro. While this may not seem important in the United States, it actually plays a role in the effect on the global economy. According to a January 11 article in the New York Times, the debit crisis in Europe and the ensuing drop in the value of the Euro are the most recent catalysts for gold’s spike. A decrease in the value of the Euro can signal that there are still even more economic troubles to come. Even if the United States is slowly starting to recover, economic problems in Europe can have a detrimental affect on exports from the United States. If the European countries are in recession, they will decrease demand for the products exported out of the United States. This will cause a slowdown in production of those products. It is a cause and effect scenario which can hamper our economic recovery as well. Current gold prices should continue to increase, with all the uncertainty about the global economy, as investors look for safe investments.