Gold Prices Ease: Shows Signs of Improving Economy
The decreasing value of gold could reflect an improved economy after it was also revealed that more jobs have been created than originally projected.
The price of gold fell 0.3 percent to $1,702.45 an ounce Monday. On Friday the price also went as low as $1,680 after it was revealed that more U.S. jobs had been created than originally believed. For non-economic majors, what does that mean?
"Investors have been buying gold because of concerns about economic weakness in the United States and Europe as well as a stretch of severe volatility in financial markets that began in early August," the Associated Press reported last year.
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Therefore it would stand to suggest that the decreased value of gold could mean that investors have decided to put their money elsewhere. Gold is typically considered a more stable investment. The increased faith in other stocks could be the first sign of improved economic conditions.
Some investors also believe that gold has been over-purchased in the past year, drastically increasing its value to possibly inaccurate extremes. "I think it was overbought, yes. I think the rally was too quick during a short amount of timespan," CPM Group analyst Carlos Sanchez told AP.
New reports however, confirm that the price of gold has been gradually reduced from 14 percent to 9.1 percent. The signs of an improved economy is also likely to effect the amount of economic assistance the United States government will provide, although it will not diminish economic assistance completely.
"Economists at most of the primary dealers - the large financial institutions that do business directly with the Fed - still say the central bank will undertake another large stimulus program. However, they now expect the scale of this intended economic support to be smaller than they thought a month ago," Reuters stated.
