A Post-Inauguration Gold Price Forecast

Friday, January 20, 2017

gold price forecast

Today, Donald Trump is inaugurated as the 45th President of the United States. While that means different things to many different people, it should mean very interesting things specifically in the world of gold investing. Gold has been holding steady around the low $1,200 mark for a while now, with early returns Friday suggesting there won’t be a lot of movement at the end of the week.

But where will gold go in the era of Donald Trump—specifically, right after the inauguration? While the weather in D.C. today isn’t at its best, there are reasons to be more optimistic about the price of gold:

Gold Shows Rebound Leading Up To Inauguration

Gold briefly dipped under $1,200 this week, but surged back above the psychological barrier at the end of the week, currently showing at about $1,204 as of the writing of this article.

That shows a bit of a gold rebound in the hours leading up to the inauguration, which may be an indication as to how investors are feeling about the prospects of gold during a Trump administration.

Avid gold watchers will want to be wary of the small sample size, however. With Tuesday’s recent peak of gold prices (   http://www.gold-eagle.com/rate/price-of-gold/ ), gold is still down since then.

Watching Interest Rates In The Era Of Trump

For some eight years, President Barack Obama’s administration enjoyed a near complete lack of interest rates as determined by the Federal Reserve. Only recently did the interest rate goals determined by the Fed tick upward, with another one in the last quarter of 2016.

To many, this spells the potential that interest rates will be higher throughout the Trump administration, as a sort of wary confidence has grown over the stock markets as a whole. Though stocks haven’t moved up to $20,000 points in the Dow Jones Industrial average, many people still believe there may be more interest rate raises from the Federal Reserve, including multiple hikes this year.

The Strength Of The US Dollar

The most important determining factor deciding the price of gold is the currency in which gold is denominated—in this case, the U.S. dollar. Watching the dollar index recently, we’ve seen a rocky road—especially with the latest remarks by Federal Reserve chairperson Janet Yellin, who painted a cautious picture of interest rate hikes ahead.

With higher interest rates, dollars tend to become more valuable. That, in turn, leads to less optimism for the price of gold—the stronger your dollar is, the more gold it can buy.

Anyone looking to find a picture of post-inauguration gold will want to watch the dollar index, including comments and actions by the Federal Reserve as they react to a new administration and new economic news.

There are those who have been waiting for a new market correction for a long time. While that looms on many investors’ minds, the prospect of a new presidential administration can mean excitement in the markets as well. With only a few hours of trading left in the week, the portrait of the economy in the Trump administration has yet to be painted.

 
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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.