Gold prices have begun to rebound in 1998, reversing the downward trend that began nearly two years ago. Analysts have attributed this recent strength to reduced fears that central banks will sell off their gold, good U.S. economic news, and less selling pressure by speculators. Some have gone further, suggesting the possibility of an upward trend. These analysts argue that, by increasing the extraction price, environmental regulations are reducing the supply of gold. Furthermore, some mines are not making a profit at current prices and may be expected to cut output or shut down, further reducing supply.
Suggested citation: “Gold Prices,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-06, pp. 07, 06.01.1998.