We share main factors that are affecting gold and its prices.
Problems in Iran left investors greatly concerned; gold priced up. The year 2018 started with mass demonstrations, riots in major cities, shooting and rallies in the Islamic Republic of Iran.
Hassan Rouhani, President of Iran:
"Not all the people who protest on the street are managed by foreigners. There are those who protest in favor of different causes: expressing concern over their feelings or unsolved problems.”
The President reassured the public, promising to do make every effort to solve the economic problems in the country.
On Tuesday 2nd of January, the market was influenced by the statements made by North Korean leader on nuclear stockpiles. The head of North Korea stated that there’s an extreme level of pressure from the United States of America.
The leader of the DPRK Kim Jong-un has warned the U.S. government:
"The United States should know that the nuclear launch button is within my reach.”
He also called for intercontinental ballistic missile mass-production.
An ounce of gold was worth $1,317.
On Wednesday 3rd of January, investors felt reassured by a strong euro and an ongoing dollar decline.
Heng Kun Hou, the head of market strategy at the United Overseas Bank (Singapore):
“Monetary policy normalization affects the whole world, subsequently weakening of the dollar.”
At the beginning of the year 2018, the political situation deteriorated once again, because the President of the United States Donald Trump responded to the statement made earlier by the head of DPRK.
The head of state and head of government of the United States of America wrote on Twitter, boasting of his own nuclear button:
“...I have a nuclear button too, bigger and more powerful nuclear button than the one he has, and mine does work!”
The price of gold rose to $1,1313 on Wednesday.
On Thursday 4th of January, investors were discussing the fall of the dollar and the upswing of euro.
Stephen Gallo, FX strategist at the BMO Capital Markets:
“The dollar’s decline is a continuation of the initial tendency, witnessed at the end of the year 2017...We have reasonably good expectations regarding the growth of the international economy and risky assets. The dollar’s slowdown is more likely to happen when there’s an above-potential growth.”
The price of the yellow metal soared on Thursday, amounted to $1322.
On Friday 5th of January, the currency of the EU continued to grow against the backdrop of strong economic data of the Eurozone. Analysts noted that the year 2017 ended with the strongest growth since 2010. ECB is ready to join forces with the FED (Federal Reserve System) shifting towards the more streamlined approach when it comes to financial policy discipline.
The Fed’s Open Market Committee's (FOMC) minute was released on the eve of the meeting. Three more rate rises along with tax rate change in March are expected in 2018.
Inflation remains the issue of concern to the Federal Reserve System. If the rate of inflation accelerates, then it could affect sharp rate rise.
Gold was worth $1,319.
On Monday 8th of January, White House economists noted that revision of tax policy is not envisaged.
James Bullard, president of the Federal Reserve Bank of St. Louis:
“Aided by low rates of inflation, inflation expectations became relatively stable.”
The price of the precious metal reached $1,1318.
Analysts predict the growth of euro in 2018, therefore, gold also has a growing potential.
Gles Kating, the Chairman of the Werthstein Institute:
"This year we are going to change the three most important people in the FOMC (Federal Open Market Committee).”
These actions will definitely affect current market conditions.
Experts from World Gold Council (WGC) already speculate on gold mining decline in 2019. Metal Focus analytics note that the declining gold mining tendency is fairly consistent. All the above indicates to gold price eventual growth.
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