Look to the U.S. economy to see why gold prices are rising: Business Matters

| Video Credit:
The Hindu

Last week, the global price of gold crossed $3,000 per ounce for the first time. Why at all this sudden frenzy for the precious metal? And why now?

Historically, gold prices and equity market performance have been inversely correlated. Meaning, whenever there is an economic upheaval, investors would pull out funds from riskier assets such as stocks, and place it in gold, leading to the label ‘safe haven asset’ for the yellow metal.

But in the past couple of years, that relationship has changed. Even as the stock markets rose, gold prices too did. If there is one thing that business or industry is uncomfortable with, it is policy uncertainty. Whenever there is no predictable pattern in policymaking, private investments typically slow down or even grind to a halt.

Also watch: Why is Trump worried about America’s gold at Fort Knox?

Script and presentation: K. Bharat Kumar

Editing: Shibu Narayan