Following a sharp rise in the gold price last week fears that the price may retreat have not materialised. So far this month the gold price is up 5%.
The spot price rose above $1,300 following the Fed’s decision to keep interest rates at historic lows in an attempt support the economy.
The interest rate announcement closely followed the news that the U.S. economy shrank by 2.9% in Q1. Growth is expected to rebound in the second quarter, however many are now questioning the health of the U.S. economy.
Escalating violence in Iraq and Ukraine also boosted gold’s appeal as the ultimate safe haven.
The recent rally in gold has come despite weakening demand from China. Gold imports into China from Hong Kong have slowed to their lowest levels since January 2013. The falling value of the Yuan is making gold more expensive for the Chinese.