Following a recent dip, the gold market appears to be on track for continued growth. A report by Citigroup confirms that major banking institutions are optimistic about the gold market outlook. Despite Federal Reserve Chairman Ben Bernanke not mentioning a third round of fiscal stimulus, he did affirm the Federal Reserve’s low interest rate policy through 2014.
The low interest rate environment discourages the growth of money through traditional savings, making gold an attractive option for investors. With the economy still fragile and the Federal Reserve unable to raise interest rates, the low interest rate policy is expected to persist until the end of 2014.
The gold market has responded positively to this news, with the upward trend resuming after a temporary setback last week. Buying on the dip and strong overseas demand have helped the market recover, with technical damage from the recent drop expected to play out and firm support provided by continued buying and strong Asian demand.
While there is always a possibility of further corrections, it is unlikely at this time as key support for gold is expected to be around $1,650. The bull market in gold is expected to resume as a result of these factors.
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