Gold investors on alert after OPEC cuts oil production
Gold investment could be buoyed after it was announced today (October 24th) that a major 13-country cartel is planning to significantly slash oil production.
At an emergency meeting in Vienna, the Organisation of the Petroleum Exporting Countries (OPEC) confirmed that it will be cutting output by 1.5 million barrels per day.
Gold price trends generally tend to follow those of oil prices, so if the latter rises as a result of the reduced supply as expected, investors may well be drawn to gold.
A number of political leaders have expressed their concerns about the move as it will inevitably push petrol prices higher and increase the strain on an already floundering global economy.
White House spokesman Tony Fratto commented: "It has always been our view that the value of commodities, including oil, should be determined in open, competitive markets, and not by these kinds of anti-market production decisions."
There is also a major possibility that inflation could be pushed higher at a time when governments are looking to cut interest rates, which could see a rash of gold buying as people look for a safe haven.
However, OPEC president Chakib Khelil has attempted to shrug off those suggestions, saying: "[The current situation] has to do with mismanagement of the economies, with the subprime crisis, with the consequences of that crisis, not only on the world economy but also on the oil sector.
"We don't believe that fluctuations of the oil price at this stage will have any effect."
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