middle east tensions

Middle East Tensions Contribute to Gold Price Volatility

Last week, gold prices were soaring. In fact, the price per Troy ounce of gold nearly crossed the $1,300 threshold. However, markets have adjusted, and prices have consolidated.

As of early trading on Tuesday, June 13, 2017, gold for July delivery was trading at just over $1,260 per ounce. For those who bought when gold was peaking last week, that downturn likely represents a loss. For those who have been buying and selling gold for short-term gains, however, the bearish turn in the gold futures market represents another opportunity to make a profit.

Gold prices fluctuate on any given day, as well as throughout the course of each week. Savvy traders have learned to watch for key markers that gold prices will go up, allowing them to buy when prices are low and sell for a profit. Analysts and investors are waiting for information from the Federal Reserve following a meeting this week. A lack of immediate economic fallout from recent geopolitical events led to a rapid depreciation after equally quick gains.

Issues with Qatar Led to Middle East Tensions

There are a number of factors that play into how gold is priced. Gold’s value tends to be inversely proportionate with the strength of the United States dollar. When investors worry about inflation and the prime rate, gold investments are often used as a hedge against inflation-related losses. Gold is also a popular investment when people want to avoid volatility in the stock market. Given the strong performance of domestic stocks and the potential for a prime rate hike to reduce inflation concerns, it’s natural that the price of gold has slumped this week. Analysts expect a recovery in upcoming weeks.

Volatility in the Middle East about Qatar being pushed out of the Gulf Cooperation Council could continue to influence gold and other investments for the foreseeable future. Concerns about disruption to oil production or a spike in crude oil prices could result in investors turning away from stocks and other commodities in favor of gold in the near future.

While there is always risk involved in investment, chances are strong that gold will continue to trend upward this year. Those involved in futures trading can profit from buying when prices drop and selling as they start to climb.

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