Which Direction Could Gold Take with Duality in the Markets?
A reduction in volatility could mean a downward swing for gold, and an increase in inflation could mean more demand for gold.
Sibanye Gold has the closest correlation to gold on a YTD basis among the four miners under review.
Last week, the S&P 500 gained in four out of five trading days and closed at record highs. On February 16, the S&P 500 VIX Index rose 5.8% to 11.49.
Last week, Fed Chair Janet Yellen’s comments boosted the probability of an interest rate hike in March to almost 34%.
Changes in the US dollar play crucially on the fluctuations of precious metals.
The market’s current volatility could give a positive bounce to gold.
Gold, the big brother of precious metals, initially lost momentum on February 14, 2017. That day, the US dollar gained strength.
Market uncertainty is the primary reason for optimism in gold. However, Trump’s plans to increase expenditures could provide a boost to inflation.
During December’s end 2016 and January 2017, Stanley Druckenmiller once again became keen on gold, maybe due to the rising unrest following the election of President Donald Trump.
As the fear of another interest rate hike persists, investors are skeptical about gold. An idea about gold’s possible direction can be taken from the investment activities of famous hedge fund managers.
The uncertainty surrounding the Trump administration has led to a rise of almost 10% for gold since its ten-month lows in December 2016.
Gold prices tumbled on Tuesday, February 14, as the US dollar rose after the US Federal Reserve chair, Janet Yellen, seemed optimistic about raising interest rates.
Janet Yellen said on Tuesday, February 14, that the US economy could likely be on a growth path and that the Fed could increase interest rates as early as its next meeting.
The higher the returns from the equity market, the higher the predicted risk appetite and the lower the demand for risk assurance.
After brief profits on Tuesday, crude oil prices are trading lower in the early hours on Wednesday. The stronger dollar is weighing on oil prices.
Gold enthusiasts seem to be in a fix, as any further movements in the precious metal are currently unclear. The world famous SPDR Gold Shares ETF has risen ~11% in 2017 so far.
According to the latest report, the US created about 227,000 new jobs in January 2017—the largest gain in four months.
The correlation between gold and the US Dollar Index is now -0.43, which means that about 43% of the time, gold and the dollar are moving in opposite directions.
Gold prices edged higher once again on Friday, February 3, 2017. On February 2, gold touched $1,219.40 per ounce, its best price since November 2016.
Gold fell from its three-month high on Tuesday, February 7, 2017, falling nearly 0.20% and trading at $1,233.40 per ounce.