Gold (Exchange:XAU=)'s sudden increase in price took the markets by surprise Tuesday, and it could be policy plans by the world's central banks policy that are driving the precious metal ever higher.
Gold hit a two-week high of
$1,193.95 on Tuesday, getting close to the key $1,200 per ounce level.
This compares to just $1,131.85 on November 7, less than two weeks
before.
The rise in the
price of gold could be a "quiet signal of people revising expectations
of outlook for US policy," Simon Derrick, head of the BNY Mellon markets
strategy team, told CNBC.
In recent weeks, analysts and economists have started expecting the U.S. Federal Reserve to raise interest rates sooner. This has strengthened the dollar (Exchange:.DXY),
and helped drive down gold. However, Tuesday's relative dollar
weakness, coupled with the expected actions of other central banks, has
helped send it up again.
The
Fed is not the only central bank which could swing the price of the
precious metal. There could be a short-term boost to the price if Swiss
voters back a proposal for the Swiss National Bank (SNB) to boost its
gold holdings and stop any further selling of Swiss gold. The vote is on
November 30.
Read More Here's why gold could be headed to $800
India's central bank may increase curbs on gold imports, according to a Reuters report Tuesday.
If imports to the world's second-biggest gold consumer were limited, there could be additional pressure on the gold price.
Gold is expected to continue its steady decline in the longer term,
with analysts at Goldman Sachs predicting COMEX gold will fall to $1,195
per troy ounce in the next 3 months, and $1,050 over the next year, in a
research note published on Monday.
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