Industry News

Gold falls but conditions remain favorable for investment

Gold fell to its lowest level since the middle of January on the morning of March 14, as the U.S. Federal Reserve reported a modest upgrade to the economic outlook and added momentum to the dollar while giving investors an excuse to lighten their bullion holdings, according to a report from Reuters.

The Fed did not provide any additional clues on the prospects of increased monetary easing after a March 13 meeting. However, it did offer a more optimistic economic outlook on the heels of a report that indicated retail sales posted their most significant gains in five months in February, the news source stated. Despite the fall in gold prices following the Fed's report, experts are still bullish on the metal.

"As far as real interest rates are concerned, we believe that they will remain low for some time to come," Walter de Wet of Standard Bank told the news source. "At the same time, economic conditions may indicate that the Fed funds rate is too low. Such a mismatch has in the past proved quite bullish for gold."

When it comes to gold exploration abroad, the government of Peru is bracing for a down year amid protests from local communities that want to shut down various mining projects. The Wall Street Journal reports the Peruvian government is only expecting 7 percent growth in its mining operations this year, compared to 77 percent growth last year, which could benefit mining operations in other parts of the world, such as British Columbia.