Towards the end of last year gold prices were on the decline as the economic outlook in some major economies improved. In fact, the commodity reached a low not seen in nearly 5 years in November as the Federal Reserve announced that they would begin the process of stopping the countries Quantitative Easing programme. Gold prices at this time had reached a point at which many mines and manufacturers had to slow production – with some stopping entirely – as the cost of producing the precious metal came dangerously close to exceeding its sale price.
Fortunately for gold, the Christmas period brought some stability, investors bought back into the commodity while its price was low and it saw a return to the $1,200 level. This, however, was only the beginning as January brought with it the Swiss Franc scandal. When the Swiss Central Bank removed the cap on EURCHF, currency markets went haywire, pushing investors into gold, helping launch the commodity to a $1,300 level not seen since August of 2014. Yet these ‘black swan’ events are nearly impossible to predict and, fortunately for many, this was a temporary blip that had negligible long-term effect on the markets and, sure enough, just two months after the market breaking event, gold prices are back where it was 4 months again.
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