Gold Forecast: How Will Gold React After A Huge Dip In The Stock Market?

Thursday, May 18, 2017

gold blocks

There are some days in the news when the stock market makes big headlines—but that isn’t always a good thing for investors. Yesterday’s big dip in the Dow Jones Industrial Average, NASDAQ, and S&P 500 showed that there is a lot of uncertainty out there in the markets, which in turn leads to a lot of nervousness on the part of investors who already have plenty of money in these markets.

But what about gold investing? After gold enjoyed a healthy day of boosted prices, due to both slips in the markets as well as the U.S. dollar index, is gold poised to continue to perform well in an environment of uncertainty? Let’s explore:

Watching The Gold Trends

Perhaps one of the most important things about gold’s recent rebounds is that gold continues to find higher and higher bottoms before turning upward again for more growth. We saw that in the two most recent dips. Now that gold appears headed to bigger and better things—at least, for the duration of the current instability—we can only wonder where the price of gold might be headed from here.

Of course, the most noticeable trend as it pertains to gold might not be in the gold price itself. It might be in the news. Yesterday we saw U.S. stocks performing so poorly that a dip that size hasn’t been seen in months. This kind of uncertainty tends to be better for hedge investments like gold, including gold stocks, as investors move away from traditional investments and look to find a way to build up some more certainty in their portfolio.

These trends add up to a potential extended period of growth for the precious metal, but relying on headlines to be de-stabilizing is not always a great recipe for investment success, either.

Where Are The Signs Of Success?

If gold is going to enjoy a continued streak of success, potentially pushing it back into the $1,300 range, then there is going to need to be more than the recent headlines. Other economic factors like the slow pace of the U.S. dollar index recently have contributed to gold’s rise—if the U.S. dollar were to make a quick rebound to end this week, it wouldn’t be surprising to see gold’s ascension put to an early end.

Signs of success come from all areas of the economy. There are central banks, especially, that have yet to weigh in on all of the instability and uncertainty. The Federal Reserve’s target interest rates are among the most important of these policy decisions—and these decisions stand to make a big impact on gold this quarter, just as they would at any time.

Forecasting the price of gold is a challenge in a market this difficult to read. The market, in turn, is made difficult to predict by the volatility in the political headlines. What will become of gold in the short-term future? Although growth could be sustained with more uncertainty, one cannot always rely on that when it comes to dollars and cents.

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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.