Four Factors Affecting Gold Prices

Although expressing some caution for the near term, Jeff Nichols has four influences on gold that should prove to be ultimately bullish: nervousness about the Euro due to the vagueness of the wording of the standby rescue package for the Grecian government; further expansion of the U.S. deficit, exacerbated by rising interest rates, which should force the Fed to resume monetizing; Asian demand rising, due not only to inflation worries but also tradition meeting newfound prosperity; and, an already-visible pickup in gold ETF demand continuing to grow. The Commodity Online article that has them explains each one.


It's the first factor that Nichols expresses short-term nervousness over. Another run in the Euro would push the greenback up to new highs, which could pull gold down to the $1,100 level again. In context, any such drop could be seen as a buying opportunity.