The price of 1 oz of gold has seen a steady rise since 1st of January 2011 to 28th of January 2011, from $1,338 to $1,411 respectively. This rise has been boosted by increase of inflation, food prices and instability in the Middle-East and North Africa.
The inflation rate in large economies like the US, Europe zone and China has increased for the month of January 2011 compared to December 2010. Each one of these economies have responded in different ways. In the US the Federal Reserve has said that Inflation was coming from countries keeping their currency undervalued rather than the US keeping their interest rates low. Both the Euro zone and China has increased their interest rates in an attempt of easing inflation increase. In Japan the inflation remained the same as the prior month.
Furthermore, rising food prices around the world has not helped in decreasing the inflation. In addition, oil prices has greatly increased, topping $100 a barrel, since the toppling of governments and mass rallies in North Africa and Middle-East started.
All the above factors have pushed the price of gold to reach $1,400 an ounce. Another factor that can be considered is continued demand for gold coming from China, 175.2 tons of gold in the 4th quarter of 2010 totaling to 579.5 tons for all 2010. This is larger considering that the US consumed 233.3 tons for all 2010.
As of March 3rd, 2011 the price was at $1,431.85. The value of Gold may continue to move up if inflation is an ongoing concern and instability in the Middle-East and North Africa continue. Some analyst have suggested that gold may reach between $1,500 to $1,600 an ounce this year.
