Gold prices remain high and are steadily holding above $1,200. On Monday, Feb. 20, 2017, gold prices per ounce were hovering around $1,240 per Troy ounce.
There seems little immediate risk to gold markets, other than the potential for a rate hike from the Federal Reserve in upcoming months. When that happens, gold may lose some of the value it has recently accumulated. Whether gold prices will quickly recover or remain bearish for some time will depend on a number of factors, including the size of the rate increase and whether other political and economic factors offset that change.
Typically, Rate Hikes Push the Dollar Up
When the Federal Reserve meets and chooses to increase the prime rate, it has an impact on the strength of the United States dollar. That, in turn, can impact investment and trading prices for the dollar and many other assets, such as gold futures. Most times, the strength of the dollar and the drive for gold investment are inversely proportional. When the dollar is strong, gold prices tend to decline. A weaker dollar, by comparison, can help push the price of gold up, thanks to nervous investors trying to hedge their proverbial bets.
Many Political Factors Influence Gold Prices, Not Just Rate Hikes
From statements by politicians to international gold importation and buying policies, many different political and cultural factors affect the price of gold. The Sharia law gold standard may impact prices. Germany’s current policy of bringing gold back within its own borders could impact markets.
Some analysts are saying that although prices seem high based on an analysis of the last four quarters of trading, based on the overall cost of mining and refining new gold, the overall price per ounce won’t likely dip much lower than where gold is currently trading.
If you closely follow international news and financial markets, investing in gold futures could prove a wise and profitable decision.
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