Gold Prices Near Five Month High: Is More Climbing In Store?

Friday, April 14, 2017

gold bricks

On April 3rd—the beginning of the month’s trading—gold was around $1,254 per troy ounce. Gold is up twelve dollars as of this Good Friday morning to $1,290, perhaps on its way back into the $1,300 range, and showing no signs of stopping. But although there are enough world headlines to send investors flocking to gold—and the Dow Jones Index has not been performing as it did to open the year—whenever gold gets to a relatively long high, we have to ask ourselves: is this merely a sign of where it’s headed, or is this where it will temporarily top out?

CNBC Shows Analysts With Optimism For Gold

Yesterday, CNBC reported that not only was gold doing well, but that many analysts anticipate it may continue to do well—and the early results on Friday morning suggest that these analysts may have had it right. Many analysts have pointed to the headlines this week—as have we, in this space—as perhaps the most important events contributing to the surge in gold’s prices.

CNBC quotes Chad Morganlander of Washington Crossing Aviators as predicting gold likely climbing some 4 to 5 percent in the next half year, thanks to increased risk across the world. If that indeed proves to be the case, we can definitively say that a fresh buying opportunity to buy gold at a low point has passed—and now it comes down to how much further gold has to climb in the current bull market.

Finding A Sense Of Where Gold Is Headed

The problem with assuming that gold is going to move to new heights? Reality. It’s simply too hard to predict where any one individual commodity—even if that commodity is gold—is going to head in the next few months. An article I wrote back in late March saw gold merely in a “holding pattern for the moment.” Of course, including the caveat that headlines can always change the context of the markets is important, but it’s apparent that no one saw this April coming except for the gold bugs.

Those who live by the headlines, however, can also die by the headlines, which means that gold can be a smart investment for those who are hedging risk, but not necessarily for those who are making it the centerpiece of their financial portfolio.

Second Half Of April For Gold

Now that we’ve seen the gold price move up in the first half of April—and indeed, the kick-off of the new quarter—it’s apparent that the world stage is full of unpredictability and even fears of escalation. If that continues, investors should expect that gold will continue its current course. But good news in headlines can also mean a tapering off of prices as investors are less interested in hedging their portfolios. As is usually the case, only time will tell in the future weeks for gold. But if April’s performance thus far is any indication, gold is looking at healthy demand for some time. 

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.