Gold investors are keeping a close eye on social, political and economic events around the world. One thing that these investors might not be aware of is how much the demand for gold is increasing or how new data from the United States is impacting gold prices. Keeping an eye on these events can help investors make decisions about where gold futures fit into their portfolios.
Gold Demand Is Up Considerably
Gold demand is so high right now that gold miners are having difficulty keeping up with it. Over the past 15 years, the demand has risen about 1,000 tonnes per year. Currently, the demand is around 4,300 tonnes per year. While this might seem like it would be welcome news for gold traders since more demand and lower supply would increase the price, there is another facet of this issue that must be considered.
Since the demand for gold is so great, legal gold mines aren’t able to keep up. This means that illegal mining operations are cashing in on the increase in demand. Gold investors, who typically want gold from legal mines, are left wanting. The issue with illegal gold mines is that the workers are predominately children.
Even some gold that is traded legally might have initially come from illegal mines. Illegal mines send the gold to refineries and trade through smugglers. This happens multiple times before gold comes into contact with the general public through gold goods or as part of the gold futures trading process.
Gold Dips as United States Dollar Seems to Strengthen
On Thursday, March 9, 2017, gold futures dropped to a five-week low. This dip comes ahead of another projected dip. This week, the United States Fed is expected to announce another interest rate hike. It is a signal of a strengthening U.S. dollar. The gold market usually reacts with a drop in prices when the Fed announces an interest rate hike.
Another factor out of the U.S. that is impacting gold futures is job data. News of an improving job market came out Friday. This is another sign that the U.S. dollar is strengthening.
Gold prices are heavily affected by the U.S. economy and the strength of the U.S. dollar. Watching the ups and downs of the gold market in relation to these factors should be interesting in the coming months.
