The price of gold rose in New York due to the increased speculation that the Federal Reserve may slowly ease monetary policy in an attempt to stimulate the economy, Bloomberg reported.
This action, predicted by many analysts due to the state of the economy, may help to boost the appeal of precious metals as an alternative asset to the U.S. dollar, according to the news outlet.
“Classic flight-to-safety instruments are getting a bid today,” Adam Klopfenstein, a senior market strategist at MF Global in Chicago, told Bloomberg. “Liquidity measures put the inflationary card in the picture. It’s the perfect storm to be long gold.”
The U.S. stocks fell due to a report that is expected to show that consumer confidence has weakened, slumping real estate prices and inaction by the Federal Reserve, reported the news outlet.
Consumer sentiment plays a significant role in how the U.S. stocks perform, and the precious metals market generally acts inversely to the American dollar. This could mean that gold may increase again if the poor economic news continues, MarketWatch reported.