Gold Prices Hold Strong Despite Resistance

Thursday, February 9, 2017

fine gold

As of this morning, gold’s price is holding strong in the $1,240 range. Generally, one might expect to see a weakened US Dollar Index in the wake of higher gold prices. However, if this week has shown us anything, it’s that gold has legs despite this resistance.

A recent article here at Gold-Eagle showed that despite positive numbers in employment, there is plenty of room for gold to repeat its January and February in 2016…thanks to a lack of confidence in potential actions in the Federal Reserve’s policies and the Trump administration. As it turns out, the jobs report isn’t the only part of the market recently that you would expect to put downward pressure on the price of gold. Even more interesting: the strength of the US Dollar Index as gold continues its bull run.

The US Dollar Index Performance

Though gold is priced in US dollars, it is by no means always inversely linked to the strength of the dollar. We’ve seen that recently, as the US dollar has continued to perform well in the previous five days of trading, as seen at this chart from Market Watch:

Source: MarketWatch

Five days represents a small sample size. But the indications from the market—coupled with other factors such as the success of the Dow Jones Industrial Average over the past few weeks—are showing that gold may have more legs than many investors imagined.

BullionDesk points out that gold prices are holding strong despite the dollar’s rebound during their roundup on metals. That only goes to show that investors are noticing the success of gold, especially relative to the current market conditions.

Investors Seeing the Shine In Gold Again?

Many investors like to turn to the world’s top investors to see where they’re moving, and Stanley Druckenmiller seems to be embracing gold. What’s notable about this particular investor is that it represents a reversal of policy, showing that Druckenmiller once again believes in the precious metal. Although the reasons for this reversal might not be public, it’s still intriguing enough to raise a few eyebrows in the headlines.

It’s important to note that these are only headlines, however—just because one investor flocks to gold doesn’t mean that there’s something in the air or behind the scenes that means gold will automatically tick upward. What it represents is another point in favor for those analysts who see a bull market emerging for gold once again.

Is Gold Marching Back Toward $1,300?

With gold back in the mid-$1,200 range, it’s tempting to ask if gold is on the move back to post-Brexit levels. Thus far, it looks as though the yellow metal may be set to repeat a stellar 2016 year, but early indications are not necessarily indicative of future performance.

Though some are watching the gold market with new found clarity, longtime goldbugs have probably seen a bump in gold prices coming for some time. The question is how long the current trend will last—and how high that will push the price of the precious metal.

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.