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Following the release of the Federal Reserve’s meeting minutes from December, the gold price made its biggest gains in over a month.
The gold price has entered 2017 with a boom. On Thursday (January 5), the precious metal reached a five-week high, following the release of the Federal Reserve’s December meeting minutes.
By 12:50 p.m. EST, the yellow metal had soared to $1,182.25 per ounce–an overall 0.91 percent increase since early December. According to MarketWatch, the meeting results indicate officials are “grappling with considerable uncertainty” regarding President-elect Donald Trump’s potential impact on the US economy.
Hussein Sayed, FXTM chief market strategist, said in an email note that there is “no clear idea” just yet what will transpire, or what impact Trump’s plans will have on economic growth, employment and inflation. “However, it has become obvious that the increase of expected interest-rate hikes in 2017 from two to three was largely based on the unknown.”
In that regard, Bloomberg reported that in a recent survey, the majority were the most bullish they’ve been on the gold price outlook since December 2015.
In Bloomberg’s survey, politics in Europe, and in the US with the election of Trump as President, together with strong gold demand ahead of the Lunar New Year, were contributing factors to gold’s seventh gain in eight sessions.
Richard Perry, a market analyst at Hantec Markets, sad in a note–as per MarketWatch– that “gold has moved into a recovery mode, which coincides with the dollar moving into correction.”
“The gold price has been pulling higher and the recovery is gathering pace,” he added. “I do, though, remain cautious with chasing gold too far higher as bear market rallies have been continually sold into over the past few months.”
That said, US dollar trends will continue influencing the gold price–for better or for worse–and there’s certainly no shortage of bullish gold price predictions. For example, Money Morning’s (subscription) recent predictions show an increase of 24 percent in 2017.
Peter Krauth, a resource specialist at Money Morning, suggests the yellow metal will reach $1,400 per ounce in 2017–but no earlier than June.
“With a new president bent on stimulating the economy through tax cuts and massive spending, along with a number of overbought markets, 2017 could turn out to be a strong year for gold,” he said in December.
As there’s no doubt plenty of anticipation in the coming weeks and months, investors will surely be keeping a watchful eye on what impacts the gold price.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.
