Forecasting Gold: What News To Watch In April

Friday, April 7, 2017

gold blocks

Last week saw us forecast the price of gold for the entire quarter. But long-term trends can be tricky. To get a read on gold’s true position, let’s zoom in and see what news headlines in April could potentially send gold heading north or south—and which headlines investors might expect.

The US Dollar Index

Forecasting the price of gold is often as simple as understanding the state of the U.S. dollar. For example, Reuters pointed out this week that gold is still holding strong thanks to a relatively weak U.S. dollar index. Gold is still holding at about $1,255 per troy ounce as of early Thursday morning, but spot gold went to $1,261 on Tuesday, a high since February. These averages are relatively high. Should the U.S. dollar index come roaring back into focus, you can expect that the price of gold will be negatively affected.

A “Trade War” On The Horizon?

Later in the Reuters report, it was pointed out that Asian markets are a little unsettled by the possibilities of a trade war. A trade war could mean a variety of things for the markets, but in general: it’s not good news. People who fear a trade war might turn to gold and silver as protections for their assets when they’re not sure about the state of their currencies or national economies.

For April, however, such a prediction seems a little out of reach. Today, U.S. President Donald Trump is meeting with the Chinese leader Xi Jinping in a meeting that could make splashes in this arena. Regardless of economic news, the political news will be important, and the markets have a way of reacting to headlines. This will be an interesting one to watch as the month develops—and as the year goes on.

Gold “Under-Owned” At The Moment?

Though MarketWatch sees a number of reasons that gold bugs should be wary of possible returns in April, they do quote a UBS team that mentions that gold may be under-owned, which means that elements within the markets should encourage more investors to buy in. Though there are plenty of issues in the economy that could put downward pressure on the yellow metal, this is one argument that gold will stay afloat.

Putting It All Together For April

With a variety of reports and potential headlines in April, it’s clear that gold doesn’t appear headed toward any predictable big jump. But as we saw last year with the Brexit vote, a single unexpected headline could push gold one way or the other very quickly.

But in terms of the anticipated news in April, it looks like the factors surrounding gold could have both upward and downward pressure on the metal, which suggests a “hovering” may be in store. If gold is truly under-owned, there’s a possibility that investors are waiting for key economic signals and headlines before moving back to gold in large amounts. But the likelihood of any given month containing those bone-jarring headlines is relatively low.  

Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.