Gold’s Price Starts 2017 On A Positive Note
There’s tremendous optimism—though some might call it cautious optimism—in the current markets. That’s been true for almost a full quarter in the equities markets. However, it appears that 2017 may be starting out with similar optimism in the commodities markets as the price of gold appears off to a healthy start in 2017.
As of this writing, gold’s price is around $1,183.00, up over 1% on the day and looking up for the week as well. This contrasts with the Dow Jones Industrial Average sinking on Thursday morning, which shows investors might be breathing new life into the price of gold.
Are These Signs For 2017?
It’s tempting to see these early returns as a sign that gold will have a strong 2017, but it’s important to remember that while the change of a year does have some psychological impact on the market, there’s no guarantee that the price of anything will be subject to the calendar. There are more important factors that determine whether the price of gold goes up or down.
MarketWatch, for example, finds that there’s reason for some optimism, but that it should be with caution. Contacting Tyler Richey, the co-editor of the 7:00 report, reporter Myra P. Saefong found that gold’s futures are up, but not so far up that they’re necessarily going to mean a roaring January for the precious metal.
Gold has been moving up about one percentage point at a time, which is a healthy and brisk pace, but not necessarily an omen for all of 2017.
Watching The Dollar Index
As anyone who follows the price of gold consistently knows, the Dollar Index may be one of the top predictors of where gold seems to be headed. The dollar has been very strong in recent months, leading to the sinking of gold’s price.
Earlier this week, the Dollar Index showed just enough room to support a higher price of gold. While Trump’s presidential election victory earlier on in the year promoted confidence in the dollar and even increased confidence in bond yields, 2017 thus far has not shown the same tendencies.
Remember, however, that we’ve only seen a small sample of 2017 thus far. What remains to be seen is whether this is simply good timing for gold on a good week, or if the bull is really charging in the gold market.
Reasons For Confidence In Gold?
Going forward, the most important question for investors is stated above: Is this really a new market for gold or simply good timing for a good week?
Wise investors should be cautious, knowing that a strong week at the top of 2017 will necessarily lead to some optimism, some of which may be unwarranted. But if the Dollar Index and equities market continue their current trend, there’s no reason that there shouldn’t be some more upside for the price of gold.
To be sure it seems that the end of 2016 may have been an opportune dip to buy gold. Whether or not that dip continues will remain to be seen this quarter.
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