Gold News: Gold Hits Four Month High On Dollar Three Year Lows

Gold News

In the latest gold news: As of January 15 at approximately 10:27am EST, gold was trading at $1340.73 per ounce, rising up again after last weeks’ strong performance. At approximately this time last week, gold was trading at $1320.51 per ounce.

gold news

Despite the conservative estimates of several analysts, gold has continued to shoot up and this week gold hit an over four month high, contrasting the the dollar index slumped to three year lows. This is a new high for gold after touching the price point of $1342.06 on September 8th. Bart Melek, head of commodity strategy at TD securities, recently stated, “A flat yield curve and a weak jobs report, which revealed still lackluster wage pressures, suggest the U.S. central bank may well be slower in raising rates than suggested by the dot plots. These factors, combined with dollar weakness, have prompted investors to bet on gold and silver.” Hedge funds have all been pouring funds in to the metals, especially considering the full range of factors involved in driving the commodities’ price up. Stephen Innes, APAC head of trading at OANDA, commented on this stating, “While the weaker dollar remained gold’s primary driver, investors are keeping an eye on the simmering geopolitical hot spot in the Middle East”. A flare up in geopolitical tensions could also push the bullion further up than expected.

On the other hand, analysts have also warned that the dollar’s low will not be a long-lasting one, as it is a low that is not driven by fundamentals. Simona Gambarini, a Capital Economics analyst, stated, “The weakness in the dollar is not justified by fundamentals. It’s a little bit weird considering the divergence in monetary policy should play in favor of a stronger dollar”. Further down the line we expect to see that Gambarini and other analysts will be proven correct to an extent, once the US Federal Reserve raises interest rates, which has been suspected for a very long time now. This will lead to a stronger dollar and thus gold’s price will drop once more. However, in the short term it is difficult to state what the immediate market action will be, as the dollar and the bullion are tightly interwoven in their relationship. Carsten Menke, a Julius Baer commodity analyst, explained it as follows, “The main reason for the tight relationship between the dollar and gold is a lack of physical demand on the gold side in terms of ETFs and Indian and Chinese jewelry”. What happens next for the dollar and the bullion remains to be seen.

This sentiment has been strong and is causing the bullion to rise up and stay steady, at least for now. In the 14-day gold prediction ending January 02, I Know First’s algorithm based on a stock prediction algorithm showed an impressive 100% accuracy rate, as seen in “Gold Forecast Based on Algorithmic Trading: Returns up to 4.53% in 14 Days.” After a fortnight, I Know First’s average percent change came out to 4.53% with GLD as the top earner, bringing in an impressive 4.53% return to investors.

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