Gold News

Gold Price "Driven by Growing Global Liquidity"

INCREASED liquidity in the world's financial markets is the primary factor behind the rise in the Gold Price, according to a sector analyst at a leading South African bank.

Global liquidity – defined loosely as the value of assets held on the US Federal Reserve's balance sheet plus the value of worldwide government debt – is "the dominant causal driver" for the Gold Price argues Walter de Wet, London-based commodities strategist at Standard Bank.

"The other causal driver is real interest rates, but this has a much smaller impact on the Gold Price relative to the impact of global liquidity," he wrote in a note to clients on Wednesday.

De Wet adds that despite the Fed's second round of quantitative easing coming to an end, there are indications that the money supply has carried on expanding.

"QE2 ended in June but the monetary base in the US continues to grow — at least according to the latest St Louis Fed zero maturity money supply data." 

Buying Gold? Make it safer cheaper and easier with BullionVault...

See all articles by Gold Bug here.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals