Is Gold’s Glitter Gone For Good

Gold has been edging up in recent months, but the outlook for the precious metal over the long-term is still dull. Gold analysts foresee prices of the yellow metal falling to $1,000 in 12 months as the Federal Reserve normalizes monetary policy.

Gold has rallied almost 8 percent since mid-July reacting primarily to reduced probability that the Fed would raise interest rates in 2015. Lower U.S. long-term real rates and increased volatility in global equity markets have also helped prices of bullion remain high and investor appetite for the metal in the U.S. has been rising as well. Gold is currently trading at $1,165 an ounce. 

When it comes to gold exports, things are moving slowly but surely. For example, Swiss gold exports to China and Hong Kong combined last month were at their highest in more than a year and a half. A marked increase in Chinese gold purchases during the third quarter of 2015 has also helped to support gold prices.

GOLD HAS BEEN EDGING UP IN RECENT MONTHS, BUT THE OUTLOOK FOR THE PRECIOUS METAL OVER THE LONG-TERM IS STILL DULL.

An interest rate hike by the Fed would most certainly change the direction of gold prices and it just might happen. According to some economists, the Fed is expected to implement a 25 basis point rate hike at the December Federal Open Market Committee (FOMC) meeting followed by 100 basis points of rate increases during 2016.

Where’s the Gold?

Where is most of the world’s gold stored? It comes as no surprise that governments, central banks, and investment funds are the world’s largest holders of gold reserves.

Most people would say the majority of the world’s gold is stored either in Fort Knox, Texas or in a vault somewhere in Manhattan. And they are correct. According to one survey, using data from an International Monetary Fund’s International Financial Statistics Report, Gold is currently trading at $1,165 an ounce. . The list starts with the Netherlands and includes Japan, France, Japan and Germany, China and Russia.