After weeks of high-value trading and several intense, bullish growth periods, gold prices are consolidating in response to larger economic factors. As of mid-day on Tuesday, June 20, 2017, gold was trading at $1,239 per Troy ounce, a substantial drop from highs of recent weeks. Thanks to an increase in the prime rate and the potential for bigger increases throughout the rest of the year, demand and prices for gold have fallen somewhat.
Those who invest in gold futures and engage in short-term trading know that the current price of gold is well below the 90-day average for the metal. Prices are very likely to recover in the near future. When that happens, those who bought when prices were down could profit.
Decline in Price Is Tied to Rate Hike
Gold is considered by many to be a stable investing option when other financial investments don’t seem as stable in the short term. Investors flock to gold during periods of economic or political instability. When the economy is strong, on the other hand, the growth in gold prices is often slower. Analysts who follow gold market trends note that gold is typically inversely proportionate to the strength of the United States dollar.
Many factors influence the strength of the dollar and investment markets. The prime rate established by the Federal Reserve is one of them. Analysts spend years learning to track how gold and other investments fluctuate.
When the economy experiences a little bump, gold often has a little slump. There are a number of reasons to increase the prime rate. Economic growth is one of them. Higher interest rates help stave off the impact of inflation, which can be disastrous for currency. While the country was recovering from a serious recession, low rates helped. People could buy homes and remain solvent during a period when the economy struggled. Now, however, with employment rates improved and a booming real estate market domestically, inflation has begun to present a risk.
Now Is a Great Time to Try Trading Gold
Gold is an investment which tends to be popular in times of economic and political instability. After an act of terrorism or when tensions increase between powerful nations, more investors look to gold. Watching social and financial trends to inform you as to when to buy and sell gold can help you profit from trading the precious metal via an online Forex platform. Now is a great time to buy gold at lower prices per ounce and trade in the short term when the price increases.
