Gold News

As investors began the year with strong fears that slowed growth in China will slow down the global pace of business, hamper the world economy, and interfere with the fragile US markets, many people flocked to Gold. Gold is believed to be a safer investment during times of macroeconomic concerns. Given the mounting concerns, gold prices increased by 4.5% in the first week of 2016, as equities saw the worst start to a year in history.

This week, however, stock markets around the world experienced weekly gains for the first time this year. The Dow Jones Industrial Average rose 210.83 points, the S&P 500 gained 37.91 points, and the Nasdaq Composite jumped 119.12 points, as oil prices increased for 2 consecutive days, reaching $32.19 a barrel, and investors saw indications that there could be more central-bank stimulus in Europe and Japan. Furthermore, the strength of dollar, according to the ICE Dollar Index was up 0.5%.

Chart Showing the rally in the three most prominent US Stock Market Indices (source: Yahoo finance)

With the increase in equities and the strengthening of the dollar, investors had less incentive to invest in gold, causing the price of February gold-futures contracts to fall by 0.2%, to $1,096.30 an ounce. Standard Bank PLC mentioned in a note that the Lunar New Year celebrations in China, where gold coins and trinkets are a popular gift, could increase the demand and lead to slight price increase.