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May
20
2017

Gold Price Back On The Attack
Darren Capriotti

After some pessimism with how gold has dipped over the past month or so—going down into the low $1,200-per-troy-ounce range—this week, we see an entirely different story. As of this morning, gold sits at some $1,257 per troy ounce, restoring the price of gold to its entry point back at the beginning of May. What’s been responsible for this drastic increase in the price of gold, and if it is just one thing, might that trend continue?

An Intriguing Gold Graph

Gold’s movement up and down has been a bit of a roller coaster lately. It looked like it was going to have a strong 2017, and then came back down to earth. The same pattern repeated in April and May. Now, gold appears to be rising again.

But far more interesting than these short cycles is the way in which gold appears to be rising as a trend. In a recent article, Seeking Alpha pointed out this chart, courtesy of Investing.com, that shows the overall movement of gold despite these relatively wild fluctuations:

As you can see, the “bottom” of gold’s miniature cycles are moving upward—and the most recent upward movement, or bounceback, appears to have put that bottom even higher again. With the stock market dropping drastically this morning, there’s a strong possibility that gold’s reputation as a hedge will provide it some lift to continue this cycle.

Gold Being Affected By The News?

It’s impossible to deny that Washington, D.C. is in a tizzy right now over news between the President and the former director of the FBI. Uncertainty like this tends to be bad for stock markets, and we’re seeing that early this morning. Gold prices, conversely, are moving up.

If it’s true that gold’s price is this much affected by U.S. political news, then there’s no sign that the news will calm down any time soon—which, of course, would be its own story in and of itself. But in terms of the prospects for the price of gold, it’s clear that the precious metal is seeing at least some optimism thanks to the idea that investors need a hedge, and that bonds are not the only hedge against the stock market worth investing in.

Watching The U.S. Dollar

Perhaps it’s not only the news, as a look at the U.S. dollar index shows a marked decline in U.S. dollar strength over the past week. It’s possible that the lack of confidence in the U.S. dollar is affected by the news, but there are so many economic factors at play here that any individual variable like that is usually not powerful enough to move the needle significantly.

With the U.S. dollar headed down in recent days, it’s no surprise that the price of gold has risen in comparison—the weaker the U.S. dollar, the more dollars it will take to buy an ounce of gold. But there are a lot of elements at play here, including uncertainty in the markets—especially today on Wednesday morning—that bear watching for gold investors.

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at [email protected].

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