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Gold Price Surges to 3-week High
The gold price climbed above $1,250 per ounce ahead of Thursday’s vote on Obamacare.
It’s been a strong week for the gold price, which climbed to a three-week high on Wednesday (March 22).
The yellow metal rose above $1,250 per ounce that day, though it was down at $1,247.55 as of 6:31 p.m. EST. Gold is considered a safe-haven asset, and this week economic and political concerns have kept plenty of investors interested in it.
Notably, market participants are worried about the coming vote to repeal and replace the Affordable Care Act in the US. The vote is scheduled for Thursday, and according to Reuters it will be US President Donald Trump’s “first major legislative battle.”
Commenting on the situation, Bill Baruch, chief market strategist at iiTRADER, told MarketWatch that gold “buyers came to the party as soon as equity markets showed vulnerability.”
The news outlet goes on to note that concerns over policies promised during Trump’s campaign have helped “diminish demands for assets considered risky” and have been beneficial for safe-haven assets like gold.
“I am expecting to see a continuation of the rally in gold as I think there will be further losses on Wall Street, which should keep demand for perceived safe haven assets high,” Fawad Razaqzada, a technical analyst at Forex.com, told MarketWatch.
ETFs as well as physical gold are performing well this week. BullionVault states that the SPDR Gold Trust (NYSE: GLD ) grew by 1.4 million shares on Tuesday as investor demand for gold ETFs increased for the 17th day in a row this year.
That said, some market participants have expressed concerns over gold’s recent gains.
“The lack of strong conviction towards gold that has prevailed so far this year suggests that the recovery thus far has been driven more by short-covering than longs rebuilding positions significantly,” said Joni Teves , a strategist at UBS (NYSE: UBS ).
Similarly, DailyFX suggests that the near-term outlook for gold is uncertain. “[T]he fact traders are net-long suggests Spot Gold prices may continue to fall,” it says. “Yet traders are less net-long than yesterday and compared with last week.”
Other experts believe prospects for gold look better. For instance, MarketWatch notes that a number of technical analysts expect the yellow metal to hit roughly $1,278 in the near future. Keith Weiner of Monetary Metals is even more optimistic, and believes the yellow metal could soon reach reach $1,400.
For its part, FocusEconomics suggests that rising interest rates in the US will “limit price gains.” The firm’s analysts are projecting that gold will average $1,253 in the final quarter of 2017.
Overall, the consensus seems to be that gold will rise in 2017 — for now investors will have to wait and see how high it will go.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.