The story for gold has been a roller coaster since the start of the year. Uncertainty about interest rates and economic policy kept the precious metal on everyone’s minds and in most investors’ portfolios. Now that the Fed has made it quite clear that interest rate increases are necessary, gold may break its low plateau and drop even further.
Current State for Gold
Gold is hovering around $1,225.99 with futures up near $1,226.1. This is up from the dip that gold took, dropping to $1,222.51, following Janet Yellen’s announcement that the Fed was ready to raise interest rates pending the release of economic data.
Essentially, the alleged rate increase is already priced into spot gold and gold futures. When interest rates rise and the dollar strengthens, gold will drop as investors switch to yield-bearing investments.
Gold companies themselves weigh in on the current situation with the dollar gaining strength. Miners have seen a serious inflow of funds after years of drying investments and opportunities. Some CEOs believe that a booming gold market creates a more expensive market – which could be bad news in an industry where competition is so tight. One expert sees gold mining stocks to soften in the coming months.
What Could Change? Employment Situation Report
Of course, the dips in gold are stemming from the anticipation of rate changes and economic policy announcements, not from actual changes. Key economic data is set to be released this week which could cause a domino effect in the market. The U.S. Department of Labor, Bureau of Labor Statistics, will release their February Employment Situation report this Friday, March 10, 2017.
With the White House not offering any offsetting policies, the Fed announcements are running the gold market for now. Some investors will hold tight to gold despite the uptick in the economy, citing that the Trump presidency holds too much risk. Keeping gold in their portfolios will serve as a safe haven investment should the economy take a dive.
Watch the Market
Gold pricing changes second to second and it all depends on getting information and interpreting it quickly. Keep your eye on the news and keep your Twitter feed rolling to stay up to date with all fiscal and economic announcements.
