Fed comments spark gold price rise

Gold prices continue to climb this month as geopolitical tensions and economic uncertainty spook investors.

Last week, the US Federal Reserve indicated that interest rates would remain the same for much of 2014, suggesting a recovery is not occurring as quickly as some would have hoped.

Fed Chair Janet Yellen said there is no “mechanical formula” for interest rate increases and the institution would examine a range of factors when coming to its monthly decision.

Following the announcement, gold prices surged 3 per cent on Thursday (June 19), which is the biggest one-day rise since September last year. So far in 2014, the value of the precious metal has jumped almost 6 per cent.

Buying gold and silver is popular during periods of political tension. As such, the metals have been performing well while the Ukraine-Russia conflict escalates and problems in Iraq trouble investors.

Donald Doyle, chief executive of Blanchard & Co, a precious metals dealer in New Orleans, told CNN Money that current global uncertainties illustrate the qualities of precious metals “when governments clash”.

“There are a lot of reasons investors should own gold,” he added.

As a safe haven investment, precious metals hedge against potential financial market collapses, with gold hitting values of $1,900 an ounce in 2011.

However, gold sales slumped 28 per cent in value in 2013 as investors sought riskier returns on other asset classes.

Despite this, many financial experts recommend investing in precious metals as part of a diversified portfolio, with a proportion of between 10 and 25 per cent often advised.

If you are interested in buying bullion, Guardian Gold and Guardian Vaults provide a complete end-to-end service that includes purchase, sale, delivery and storage of your investments. We also insure your gold and silver to provide complete peace of mind that your assets are safe and secure.

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