Gold traded over $1320 an ounce on Thursday as the stock market took a massive hit and the weak U.S. dollar index resulted in a round of safe haven buying of the yellow metal. Equities selling reigned across the board, with the Dow falling 267 points, the S&P 500 dropping 39 points for a 2% loss and the NASDAQ sinking 130 points for its largest drop since 2011. Investors cut back positions in the overheated technology and biotech sectors with some of that money running to gold and silver, which closed up 23 cents after reaching a gain of 45 cents earlier in the day.
Safe haven demand for the precious metals flourished Thursday, with silver back up over $20 an ounce to close at $20.03 and gold closing at a robust $1320.50 an ounce. The U.S. dollar index continued to show weakness and the Fed appears to be more inclined to intervene on behalf of the economy with inflationary measures, both adding fuel to the fire as to the case for investment in safe haven vehicles. Furthering the momentum for gold and silver is the crisis in the Ukraine, with Russian President Vladimir Putin again hinting at punitive measures, this time economic sanctions to punish Ukraine via as a suspension of oil and natural gas supplies. With NATO now calling for Russia to pull back its military forces to diffuse the situation, geopolitical risk is rising and an escalation of conflict could propel a run to buy precious metals that would top anything we’ve seen this year.
With investors still digesting the Wednesday FOMC meeting comments of Fed Chairman Janet Yellen, the current thought is that it will be a while before interest rates are substantially raised. Easy money supply is in place and an increase in future quantitative easing looks probable- the combination of growing investment capital and inflation is pointing gold and silver firmly in an upward direction. The U.S. dollar is at a fresh 3 week low, and the ongoing weakness in the greenback will do nothing but increase the shine of gold and silver as we near the halfway point of April. Our next test of gold will be the $1325 level, and a closing price over that should pave the way for it to reach $1350 in short order.
Now is the time to buy gold or silver
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