Gold Continues to Climb above the Crucial $1,300 Mark
Reaching its highest level this year, it was another shining week for metals, as gold continues to climb above the crucial $1,300 mark. It opened the week around the $1,305 mark, and closed just over $1,320 to head into the long weekend. Fed comments, more North Korea missile tests, and a weaker than expected jobs report all contributed to solidifying support at the $1,300 mark. Silver also rallied this week, closing at $17.70.
The jobs report showed fewer jobs added than expected, and the markets interpreted this soft data as likely to make the Fed more reluctant on lifting rates. This is one of a few factors that is helping to drive the dollar index down. Further driving gold this week, North Korea fired a missile that flew over Japan before breaking apart. As tensions and rhetoric escalate on the growing threat, gold will continue to go up.
What this means for investors:Some investors took the rally this week as an opportunity for profit taking, selling off some gold and silver. However for others, seeing stress signs and rising tension, it became a buying opportunity. Prominent hedge fund managers increased metal allocations in their portfolios, and recommended others do the same.
Driving Gold: Weak Dollar and Yellen Comments
When gold rose on Monday, it was responding in part to comments of Fed chair Janet Yellen and ECB chief Mario Draghi. Last week the world’s top central bankers met at Jackson Hole, Wyoming for their annual summit. Draghi’s comments that Europe’s ultra-loose monetary policy was thus far successful. The comments lifted the euro against the dollar, and gold got a boost as well.
What Janet Yellen said – or rather, didn’t say – is more significant though. She didn’t give any allusions to U.S. monetary policy and the possibility of a coming rate hike. Rather, she focused on financial regulations. This has led to analysts’ speculation that interest rates will rise slowly. Both central bank chiefs sent the dollar into retreat with their comments, which helped boost gold prices.
What this means for investors: Gold is sensitive to rate hikes, and often falls with rates go up, since it is a non-interest bearing asset. However, lately it has been rising when the Fed talks about raising rates because of questions over the strength of the economy.
[WATCH] Market Technician Louise Yamada Talks about a Gold Breakout
Louise Yamada discusses the market technicals in the market that are boosting gold right now, and what could be next.
Trouble watching? Click here
What this means for investors: Yamada sees gold’s possible run to $1,400 as supported by more than just geopolitical uncertainty. She sees historic, technical data that supports the next break out for metals.
Download “10 Reasons You Should Own Gold” eBook: Updated for Mid-2017!
You can go and view, print or download the PDF of the eBook right now by clicking on this link.
Stay Connected to the Markets. Subscribe Now to Get the Gold Market Discussion Delivered Every Sunday Directly to Your Inbox!
As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at 602-955-6500 or toll-free at 877-354-4040.