Gold Price Forecast: Thanksgiving and Beyond for the Precious Metal

Thursday, November 23, 2017

gold bars

With Thanksgiving this week, the markets are a bit shortened—leaving the price of gold room for little movement as investors try to identify a good time to buy into the metal. With the Dow Jones performing well to start the week, pressure on gold was initially downward—especially as the strength of the U.S. dollar held up.

Post Thanksgiving, how will gold bode as we enter the end of 2017 and look forward to 2018? What are the elements to watch for? Let’s break it down:

Economy “Ready” for a Rate Hike in December?

Most of the news in financial circles will focus inevitably on the chances of a December rate hike from the Federal Reserve. Tightening of monetary policy tends to lead to a stronger dollar, which in turn would mean tightening for the price of gold as well—for example, as the Federal Reserve loosened its belt during the financial crisis, gold started soaring to new highs. Now that the crisis appears to be over and the Federal Reserve has no intention of keeping rates at zero, there’s a chance that analysts are right about the rate hike being inevitable.

The question then becomes whether the economy is ready for it—whether the markets have “priced in” this hike. If so, investors shouldn’t expect much movement from either the stock markets or gold, at least not right away in December. The fact that this would not be a shock at all tends to suggest that markets won’t have a strong reaction in either direction come mid-December.

Expecting $1,400 per Troy Ounce in 2018?

The slate for gold then becomes all about what happens next year. There was no major “Brexit”-like happening during 2017, which is one reason we saw gold not make any major spikes forward. The question then becomes not only whether we can expect major geopolitical headlines like that in 2018, but what to expect if there aren’t any. For example, in 2017, geopolitical forces did seem to be in turmoil—but without any sudden spikes that would have sent markets reeling. Will 2018 be closer to 2017, in which we might expect to see steady growth, or closer to 2016, in which a singular event might have a dramatic impact that sets people to reevaluating what they think they know about markets?

Watching the Holiday Season

Recently, we saw the stock of Walmart make a sudden move upward because of higher-than-expected earnings. Expect this year’s holiday season to have a dramatic impact on investor confidence one way or another, depending on where the earnings ultimately end up for a range of segments, especially retail. Although gold isn’t necessarily directly affected by these elements, it will serve as a hedge if there is a tremendous amount of pessimism. If investors expect a strong holiday season bolstered by a strong stock market, it may be a good time coming up to buy “on the dip” when investing in gold and watching it for 2018.

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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.