Is Gold Providing An Investment Opportunity?
Movement of gold prices since the Brexit vote
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Between June 23, 2016, and June 23, 2017, gold fell nearly 6.0%, from $1,338 per ounce to $1,258 per ounce. On June 24, 2016, after the announcement of the Brexit vote, uncertainty arose in the global markets, and they started to bleed. However, gold rose nearly 6.0% that day. It indicates that investors typically prefer gold during an equity market (IWM) (QQQ) rout.
Gold prices after the US presidential election
After the US presidential election on November 8, 2016, the markets around the globe reacted. Major US indexes showed huge improvements, and the S&P 500 index (SPY) returned nearly 12.6% between November 8, 2016, and June 23, 2017. However, gold fell nearly 2.5% during that period. Gold also fell about 12.0% between November 8, 2016, and December 23, 2016, when it hit a low of $1,134 per ounce.
US dollar movement
The movement of the US dollar always impacts gold. From December 23, 2016, the weaker dollar (UUP) (UDN) helped gold recover some of its losses. President Donald Trump’s delay in policy reform, an investigation into Russia’s possible interference in the US presidential election, and various reports raising questions about President Trump’s possible involvement raised investor concerns about the US economy. Because of this, the dollar is showing a weakness.
Going forward, if we see any instability in the global markets (ACWI), investors may focus their attention on this safe-haven asset.
In the next part of this series, we’ll analyze the performance of crude oil during the one-year period.