Gold is having a great start. Since 2015 began, the precious yellow metal’s spot price climbed to 6%. In addition, new data reveals that physical bar and coin consumption had a 500% increase in the last 6 years.
Miners are doing very well, too. One of the most successful junior mining companies today, Dynacor Mines, had raised its stock prices from $0.20 to $1.65 per share. On the other hand, Inca One enjoyed a 52-week high by the end of January.
According to fundamental factors, it would seem that there had been 3 major supports for gold at the start of the year. First are the talks of European Central Bank’s stimulus, which would seem to follow the U.S.’ aggressive bond buying program that ended just last year. Another one is the low oil prices that lent support to the expensive mining operations of miners all over the world. The last one is India’s surprising cancellation of its gold importation law, which forces gold importers to re-export 20% of their shipments before distributing the rest in India for selling. India enforced the law in order to curb its skyrocketing account deficit and after it had been abolished, gold demand in the country soared. According to economists, if France had only curbed its law on gold imports, it would’ve lent support to gold’s current rally, too. BullionVault reports that last year, France’s tax rate on the yellow metal was deterring investor sales in the country.
While gold had a great start this 2015, it would seem its rally wouldn’t last for long. Gold immediately fell as much as 0.4% when the U.S. Fed announced that interest rates will indeed take place this year.
James Bullard, the President of Federal Reserve Bank of St. Louis, said that investors were wrong to think that the central bank will postpone the interest rate hike set to take place in the middle of 2015. The interest rates hike will push through because the U.S. economic data showed solid signs of recovery in its last month’s statement.
