Experts of the World Gold Council have determined the factors that impact the price of the yellow metal.
The head of North Korea, Kim Jong-un has given consent to the IAEA expert inspection of nuclear facilities in the country. The state leader confirmed his readiness to freeze the nuclear program if Washington agrees to the terms of North Korea.
Against the backdrop of the peaceful course of negotiations, the U.S. currency noticeably strengthened, while the euro fell in price.
According to the World Gold Council report, the dollar holds a dominant position among other factors that raise prices of precious metals. The price of gold is determined both by the position of the American currency and interest rates. However, the situation has recently changed, and according to experts of the World Council, the dollar will outstrip interest rates in its influence on the yellow metal.
"The U.S. dollar is a stronger indicator of the direction of gold prices," has been stated in the report.
Experts of the World Gold Council:
"U.S. interest rates do not necessarily influence the behavior of global consumers of gold jewelry or of technology demand for the precious metal. Nor do they affect the behavior of investors outside the U.S. for whom local interest rates matter more than U.S. rates," has been stated in the report.
On Tuesday, 24th of April, the price of gold was $1,330 per ounce.
On Wednesday, 25th of April, investors' sentiment on the precious metal market has changed.
In a published research paper, the Overseas-Chinese Banking Corporation (OCBC) economist Barnabas Gan announced an increase in the price of gold.
Gan predicts that gold prices will reach $1,400 per ounce by the end of the year. This forecast has a significantly bigger data than the last year-end data — $1,150 per ounce.
According to the analyst, the weakening of the U.S. dollar and the continuing geopolitical turmoil will support the upward trend of the yellow metal.
In the photo: Mr. Barnabas Gan is a Commodity Economist at OCBC Bank. He covers macro-research within the firm's treasury research unit. He noted that the price of the yellow metal will rise to $1,600 per ounce in the future.
On Wednesday, 25th of April, amid the growth of the dollar prior to the upcoming ECB meeting, the price of an ounce of gold was $1,323.
On Thursday, 26th of April, a meeting of the European Central Bank took place, prior to which the dollar considerably strengthened its positions.
Many analysts view the price decline of gold as a combination of rising rates and the strengthening of the U.S. currency.
Higher interest rates create a strong inflationary pressure, which can boost the interest in gold. Traditionally, the yellow metal excels during periods of high inflation and contributes to people's desires to strengthen their financial security foundation.
On the 26th of April, an ounce of gold was worth $1,317.
On Friday, 27th of April, after comments of the President of ECB Mario Draghi in Frankfurt am Main, the dollar currency strengthened. The regulator noted the growth of inflation and the economy within the eurozone. According to the head of the Central Bank, risks are related to geopolitical factors.
Mario Draghi, President of the EC:
"Trade disputes have a profound and rapid impact on trust."
In the photo: Mario Draghi has no doubts regarding the positive outlook for the eurozone.
The ECB kept all three interest rates at the same level. Draghi announced the decision to not change anything for a long-term perspective.
The next meeting of the ECB will be held in Riga (Latvia), in June 2018.
After the meeting of the European Central Bank ended, the price of an ounce of gold amounted to $1,323.
In connection with the May holidays, European stock markets were closed.
On Tuesday, 1st of May, the dollar significantly strengthened its positions.
The United States extended the period for the exemption of the EU, Canada and Mexico from duties until June 1. The European Union expressed discontent with the extension of the term. European experts believe that the situation with imposed duties on steel and aluminum contributes to the market uncertainty.
Masafumi Yamamoto, a chief analyst at Mizuho Securities in Tokyo, said that he was certain of the European currency weakening. According to the expert, the decline of the euro currency is caused by the ECB position.
On the 1st of May, the price of an ounce of gold was $1,304.
On Wednesday, 2nd of May, the price of gold rose sharply. According to Capital Economics experts, gold prices will rise even higher. After the Federal Reserve completes the tightening of the monetary policy in 2020, an ounce of gold could be worth $1,400.
Naguib Onsi Sawiris — a Egyptian entrepreneur, whose fortune exceeds 4 billion dollars, prefers to invest in gold. According to the entrepreneur, gold is the foundation of financial security and the most appropriate investment given the increase of geopolitical risks.
Millionaire Naguib Sawiris:
"Prices of gold should return to its initial figures of the previous five-year period, when they were within the range of $1,700 to $1,800."
On the 2nd of May, the price of an ounce of gold was $1,311.
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