Access Investments-European Union- ROMANIA

The US Federal Reserve plans to raise interest rates this year on the back of an improving American economy, and that is taking the shine off gold. ... Why? Because gold is a store of wealth for investors, but generates no returns from regular interest payments or dividend income. Investors have been happy to park their money in gold over the past six years while returns from other 'safe haven' assets have remained low and the economic backdrop has remained volatile. But, with borrowing costs set to rise, commodities, such as gold, are losing favor with investors, as higher returns can start to be generated elsewhere. The UK interest rate is 0.5pc. In the US, the interest rate, set by the Federal Reserve, is 0.25pc. US Federal Reserve chairman Janet Yellen has suggested interest rates should rise by the end of the year, while Mark Carney, the governor of the Bank of England, also signaled that UK interest rates could begin to rise around the beginning of 2016, if not earlier. .. The US dollar has been growing stronger, boosted by a resurgent American economy and the prospect for a rate rise in the next few months. The US dollar index, which tracks the price of the US dollar against the world’s currencies, has increased by more than 20pc within the past year.   The value of the US dollar typically follows an inverse relationship with commodities. When the dollar strengthens against other major currencies, the prices of commodities - such as gold - typically drop. When the dollar weakens, commodities generally move higher. The main reason for this is because most commodities are freely traded in international markets and prices are quoted in US dollars.  Foreign buyers will purchase commodities with dollars, so, when the value of the dollar drops, they will have more buying power, and demand increases. Similarly, when the value of the dollar rises, they have less buying power and commodities become more expensive, muting demand and sending commodity prices lower. .. The slowdown in the Chinese economy, the world's largest consumer of commodities, has also caused the gold price to fall steadily since 2011.  China has increased its reserves of gold bullion by 60pc since 2009. However, on Friday the People’s Bank of China revealed it has been buying far less gold than expected. China updated its gold bullion reserves for the first time since 2009 last week, showing that while reserves had increased, the 57pc gain to 1,658 metric tons was smaller than the 3,500 tons analysts had been expecting.