Last week was a volatile one for gold futures. Prices, which have been trending up, dropped back under $1,200 before finishing the week strong.
Today’s high, as of midday, February 6, 2017, has been over $1,230 per ounce. The price has been fluctuating up and down somewhat, but may very well continue trending upward. For those who have been investing in gold futures recently, the Fed’s inaction last week could be a financial boon. Gold is gaining steadily, and it very well could continue to do so.
Why Fed Inaction Affects Gold Prices
The United States dollar tends to strengthen on the international monetary market when the Federal Reserve sets a higher prime rate. This is because increasing the interest rates being charged domestically can help fend off rapid inflation. It also reflects a stronger overall economy, which gives investors confidence in the currency. When the Federal Reserve decided not to increase the prime rate last week, it weakened the dollar. Because the U.S. dollar typically trends inversely with gold prices, when the dollar dropped, investors turned to gold, which gained a solid 2 percent last week.
Market Analysts Watching Gold Closely
Those who closely follow the markets were predicting weak gold trading prices in early 2017. So far, gold has outperformed most expectations in the first month of the year. This is in no small part due to a weaker dollar, whose drop can be attributed to economic uncertainty and the continuation of a low prime rate. The way that gold is trading right now could be an indicator of things to come.
For now, as with all such investments, predictions about future performance are nothing more than guesswork. All kinds of events, from a bad flu season to diplomatic issues, can impact the trading prices for currencies, stocks and commodities. Although it may be hard to predict long-term trends accurately, short-term trading can be lucrative for those who carefully watch the market’s movements.
Invest in Gold via a Forex Platform: You Might Profit Off the Fed’s Inaction
If you haven’t tried it yet, you can invest in gold via an online Forex platform. There’s no need to even leave your home. One of the best things about online Forex trading is that you can leverage your liquid capital investment. Doing so allows you to control the buying and selling of more gold futures than you could if you were purchasing physical gold or bullion.
