Gold News: Gold Trades Sideways On Rapid Senate Action
Gold News
In the latest gold news: As of December 18 at 9:52am EST, gold was trading at $1261.87 per ounce, rising slightly from last weeks’ price fall. At approximately this time last week, gold was trading at $1250.29 per ounce.
Upon market opening this week, gold saw much of the same action as last week, which resulted from the U.S. Senate’s approval of a tax reform bill. Although gold is trading slightly higher than last week at the moment of writing, analysts believe that gold will face a ceiling of resistance at the mid $1260’s range, and possibly retrace steps back to the support price of around mid $1230’s. This movement is mostly due to the fact that in the face of the tax reform bill, the market is waiting wary to see how gold should react, given the mildly strong dollar as a result. Furthermore, gold also traded sideways this Monday due to pressure from firmer equities. It is important in these cases to look to the political scene currently, as it is what is holding the most sway in terms of gold prices right now. The big news going in to the market today was that US Republicans said they expected Congress to pass a tax code overhaul this week. This would mean a Senate vote possibly as early as Tuesday. They also stated that President Donald Trump aims to sign the bill before the week is out. This means that gold prices are likely about to see more downward pressure.
Richard Xu, a fund manager at China’s biggest gold exchange-traded fund, HuaAn Gold, commented on the tax reform, stating “I think we have the last bearish news, which is the tax reform, and that is negative for gold so we expect gold to stay pretty depressed”. Xu and others are expecting this in the market because the US tax bill will cut taxes for businesses and the rich while offering everyday Americans a mixed bag of changes. This means that there will be and there already has been a surge in equity markets this year. Furthermore, there are expectations that tax cuts will spur economic growth and thus prompt faster interest rate rises in the United States. This means a boosted dollar and overall more weighing downwards on gold’s price. This is on top of the already boosted dollar expected due to the multiple interest rate hikes planned for next year by the Federal Reserve. What this all means for investors is that for now, and for the short to mid term future, gold will likely be staying at lower prices, although many believe that gold will bounce back within a two to three year time frame, increasing its price to above $1400 and possibly higher on a longer outlook.
This sentiment has been strong and is causing the bullion to trade sideways in a bounded price range that is considerably lower than earlier this year. In the 7-day gold prediction ending November 19, I Know First’s algorithm based on a stock prediction algorithm showed an impressive 100% accuracy rate, as seen in “Gold Price Predictions Based on AI: Returns up to 2.41% in 7 Days.” After a week, I Know First’s average percent change came out to 1.76% with XAG as the top earner, bringing in an impressive 2.41% return to investors.
