Gold prices increased yesterday, and were on track of registering their biggest monthly gain since November 2009. Gold for June delivery increased by 0.18 percent to USD $ 1533.90 an ounce. The increase in price was spurred by a weak dollar and increasing inflation in the US economy.
The US Dollar declined to its lowest level since December 2009 against the Euro, on account of the Fed continuing its purchase of US Treasury bonds worth USD $ 600 billion, and maintaining very low interest rates. The depreciation of the dollar is driving investors towards gold, since they see it as a much viable investment in the face of the falling value of the dollar. Data released by the Commerce Department showed that the US economy’s growth rate in the first quarter of this year was lower than forecasted.
Moreover, central banks throughout the world, and especially from the developing countries, are rushing towards increasing their gold reserves and buying more of the precious metal as a reserve currency. The falling value of the Greenback due to the low interest rates maintained by the Fed in the US is convincing these countries to depend less on the US Dollar as a reserve currency and more on gold. This has spurred the demand of gold, increasing its price.
Silver crude future increased by 1.51 percent to USD $ 48.260 an ounce.