Risk Aversion Ups Gold Price, Making "Gold Substitute" More Popular

Due to the increased risk aversion among people, the gold price, which had fallen three weeks, ups these days. The international gold price rose 2.37% to $1278.26 / oz per week, and is expected to exceed $3000. Whether gold can continue to maintain the current strong or not, the upcoming U.S. 

Federal Reserve meeting has become the biggest thing. And if the Fed continues to maintain current interest rates, then gold prices will have a greater upside. So, what are the main reasons to increase the risk aversion in the market?

REFERENDUM OF BREIXT
June 23, 2016 Britain will hold a referendum on whether to fall out of the EU, which also makes the growing risk aversion of investors, hedge operations gradually occupy the financial market. Because once Britain fell out of the EU, it will have a major impact on the global economy; the EU's international status will be greatly reduced due to losing the supports of British. And previously released British poll results have plunged the pound's parity against the dollar and the stock market, bond market and foreign exchange markets are all affected. Investors’ multiplying worries make the gold, silver and other precious metals which has such special hedge function popular. International gold price becomes stronger and stronger, but the stock markets of Europe and the United States and international oil prices suffered selling.

INTEREST INCREASING ARE COOLING EXPECTED
U.S. May non farm data is bleak, which led to a lot of investors worried about the U.S. economy. The state of the U.S. economy is an important measure index to guide the Fed whether to raise interest rates or not, while the dismal non farm data makes investors extremely worry about the further economy, and it also reduced expectations of the Fed's interest increasing. Also as mentioned earlier, if the Fed does not raise interest rates, or they still maintain the existing interest rates, gold prices will also go strong all the way.

The worries on the referendum of British falling out of the European and the cooling expected of U. S. Federal Reserve interest rate increasing makes the price of gold in an up trend. But on the other hand, the high gold price has weighed on the demand for physical gold. This makes non investment enthusiasts reduce their consumption of physical gold, such as gold jewelry, gold crafts, etc. Owing to its excellent properties of good corrosion resistance, wear resistance and comparable beautiful and exquisite appearance to gold products, as tungsten gold plated products become the good substitute for many gold artifact enthusiasts. But tungsten alloy products do not have the hedging value as real gold; although it is well know as “gold substitute”, but it can only be used as crafts, gifts and collections, etc.

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