More institutions and countries bet on gold

Despite the recent slump in prices, which has seen gold hit month low prices, many analysts keep their faith in gold

Amongst others, Citygroup has released a forecast in which its analysts predict that gold may breach the 2000 dollars per ounce milestone. According to Citygroup, this may happen to several factors such as low interest rates, uncertainty on the markets and an increasing risk of global recession.

In related news, Chinese central bank has announced that it will keep adding gold to its reserve. Over the last year, almost 100 tons have been bought by the central bank. The official explanation has been that this is due to continuing drive to diversify its holdings.

In the past, there has been a significant correlation between gold prices and economic uncertainty. Simply speaking, when economies boom, gold prices tend to stagnate or even drop. But when the growth starts to slow and doubts emerge, then gold starts its growth. And when a recession hits, gold starts surging.


Source: Bloomberg


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