Between The Fed And A Brexit, Precious Metals Continue Gains

Precious metals have been skyrocketing recently…and for good reason. There are two big stories coming out of the United States and Europe that are supporting strong growth in the values of gold and other precious metals. Today, we'll talk about the two stories and what we can expect to see in the price gold moving forward.

Story #1: The United States Federal Reserve Likely To Delay A Rate Hike

For some time now, the Federal Reserve has been talking about increasing its interest rate. In fact, the discussion surrounding interest rates actually started in late 2014 after the Federal Reserve announced the end of quantitative easing. At the same time, the central bank said that it would be increasing its interest rate in 2015.

Throughout the year 2015, economic conditions around the world and in the United States weren't great, to say the least. This hindered the Fed's plan to increase its interest rate until December. During the month of December, the Fed not only increased its interest rate, but said it would be processing between two and four more rate hikes throughout 2016.

Nonetheless, we're seeing what many would consider to being a repetition of 2015. While many believed that the Fed would have raised its rate by now, it simply couldn't do it quite yet as a result of poor economic conditions in the United States and around the world.

Because the Federal Reserve's interest rate is what gives value to the USD, and the fact that gold is priced using the USD, an interest rate increase would cause the value of gold to decline. Effectively, increased interest rates would lead to gains in the USD, causing gold to become more expensive around the world…leading to declines in demand. Nonetheless, with all of the economic data available to us at the moment, it seems clear that a rate hike isn't going to happen this month or anytime soon. As a result, the value of gold is being pushed up by a weaker than expected dollar value.

Story #2: Brexit Vote Will Happen This Month

If you've been watching the market, chances are that you've heard the term Brexit. This term is used to describe the action of Britain leaving the EU. On the 23^rd of this month, the consumers of Britain will be casting a vote with regard to the Brexit. If the vote is passed, Britain will no longer be a member of the EU.

This is causing quite a bit of support in the price of gold as well. The truth is that Britain is essentially a key binding factor that is helping to hold Europe together during this tough economic time. If a Brexit actually does happen, chances are that we would see widespread economic panic in Europe. Because gold is a safe haven investment, this would lead to massive increases in demand for the precious metal, ultimately leading to gains in its value.

What We Can Expect To See From Gold Moving Forward

I have an overwhelmingly bullish opinion of what we can expect to see from the price of gold and precious metals market as a whole. At the end of the day, central bank involvement in economy improvements has actually paved the way to big gains in the value of gold. In Europe, quantitative easing is causing bonds to be less desirable. This leaves one primary safe haven class left, i.e. precious metals. We are seeing the same in the United States as the result of low interest rates -- and around the world as the result of other central bank moves. In view of pervasive dire economic and market conditions, investors are looking for ways to keep their money safe. Consequently, gold is becoming an overwhelmingly popular choice, which will likely lead to big price gains in the long run.