Gold News: Gold Continues Strong Rebound On Inflationary Pressure

Gold News

In the latest gold news: As of February 19 at approximately 11:11am EST, gold was trading at $1348.28 per ounce, dipping slightly after reduced prices last week. At approximately this time last week, gold was trading at $1323.57 per ounce.

gold news

Since last week, it appears that gold has experienced even further upward movement and is now recovering slowly to its prior price points. The metal is overall still up more than a hundred dollars since December of last year. As previously discussed, the price of gold is closely tied to the price of the dollar and despite the slow rise last week, it seems that the gold market has found new legs following the inability of the US dollar to break above key resistance levels. The dollar eventually hit a new three-year low early Friday and this has been an extremely important factor for gold, which is apparently seeing its best weekly percentage gain in nearly a year. TO reiterate, the US Dollar index dropped below the critical psychological level of 90 points, it last traded at 89.65 points, down 0.50% on the day. Even though the dollar has since regained a few losses, gold has remained mostly flat and maintained its position in its higher price point and is likely to remain there or even grow.

This strange dynamic is likely due to a couple strong reasons. The first is that there have been increasing fears of US inflation in recent times, and it has kept buyers in the market for gold, keeping its safe-haven status. The second is another worry that in fact, the weak dollar actually points to a recession and when coupled with narrowing US Treasury yields investors are cautious of investing in the dollar. The third is that the market is still digesting President Trump’s budget plan for 2019 and will likely take a while to factor this in. Of course, all of these factors are interlinked and represent the momentum of the bigger picture. There is an idea that the Fed should bolster the weaker dollar by widening the interest rate divergence between US and Japan. However, Alan Ruskin at Deutsche Bank believes there seems to be “a lack of fear about the Fed and possibly some new credibility issues as it relates to the central bank’s warding off the inflation pressures”.

This sentiment has caused the bullion to reach up to its previous price points, 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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