Tag Archives: dollar index

Jul 20

Price of Gold Weekly Recap – July 16-20

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Monday Open: $1,588.10
Weekly High: $1,596.50
Weekly Low: $1,569.30
Friday Close: $1,584.00

This week continued the typical holding pattern that gold has been experiencing since the beginning of the summer, following a few modest ups and downs but generally maintaining a steady balance, not straying not too far from $1,580 during this 5-day trading period. The major events of the week included anticipation of some change in Federal Reserve Chairman Ben Bernake’s economic policy, gains in the Indian rupee, a falling dollar and escalating conflicts in the Middle East.

Monday opened steady, with a weak dollar index, firm oil prices and news from China that their economy is still sluggish. Monday evening and Tuesday morning marked a slight rise in the price of gold to almost $1,600 (with some opting out of the market, as well), as bullish traders anticipated Bernake’s remarks on Tuesday afternoon. Despite the same story repeating itself over the past few months, where some clues indicate that Bernake may loosen U.S. economic restraints, thus burgeoning gold, he once again disappointed gold bulls on Tuesday with no concrete changes in financial policy. Compounding the disappointment was a slightly stronger dollar, and prices dropped to close lower on Tuesday.

Bernake spoke again on Wednesay, and true to pattern, said nothing on third quarter easing. Gold dropped slightly. Thursday revealed more weak U.S. economic data, spurring gold to climb back to its original state of around $1,580, and this foundation persisted through the end of the trading week. Friday saw slightly higher economic reports and a stronger dollar, but not enough to create a significant change in price.

Indian demand for gold is on the radar this week, as the rupee has been gaining strength and Indian traders, especially jewelers, are anticipating next month’s festival and wedding season. Gold is a tremendous part of Indian culture, especially special events and weddings, and though the rupee saw modest gains this week, Indian traders are still generally hanging out on the sidelines. Still, some analysts predict the price of gold to spike as much as 25% in the next month due to Indian demand.

In other news, a suicide bomber attacked a bus full of Israeli tourists in Bulgaria on Thursday, and late Wednesday, the Syrian defense minister was assassinated, heightening tensions in the Middle East. Any serious conflicts arising in the Middle East will likely spur a safety rush into gold, as well as increases in crude oil, which would also strengthen the precious metal.

With all these competing and mostly hypothetical factors influencing gold, the yellow metal seems to be stuck in a summer limbo. One report quoted Goldman Sachs as expecting gold to reach $1,840.00 per ounce in the next six months. As for now, traders are still waiting for U.S. policy changes, and Kitco’s weekly survey reported that participants are still pretty evenly split on the future of gold.

Jul 14

Price of Gold Weekly Recap – July 9-13

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Monday Open: $1,581.20
Weekly High: $1,600.10
Weekly Low: $1,556.30
Friday Close: $1,589.40

Gold took a minor upswing followed by an equal downturn this week, followed by another upswing to regain balance, opening around $1,580 to close at just about the same price. This week continued the major pattern of gold this year, with modest (under $50) fluctuations, though no major changes. Many experts believe that gold will hover around the $1,500 mark amidst all the economic changes happening in the U.S. and Europe, and if it does so, it remains a fairly stable investment. Reaching the $1,600 mark is always a slight cause for celebration, and it just touched it again this week.

Gold continues to rise inversely to the dollar, and Monday opened with a strong dollar, pushing gold down. Tuesday marked a volatile day, as morning news reported dollar losses, pushing gold up to exactly $1,600, then dropping back down $40 as updated information became available and the euro actually spiked tremendously. This proved to be the strongest inverse correlation between gold and the dollar in almost two months, since the dollar reached nearly a two-year high.

Still, gold is hovering in the safe range, which falls between $1,550 and $1,630.

Afshin Nabavi, head of MKS Finance, commented on this recent price range for gold. He said on Tuesday, “It looks like $1,630 is pretty much a brick wall, while on the downside, $1,550 is equally strong support. So unless something extraordinary happens, we will be stuck in this range…Everyone wants to get involved in gold, but they have been disappointed several times, so I think we need a confirmation that gold is really going somewhere, and that will only happen when it gets above $1,630, only then will we have some investment come back into the market.”

As for now, gold is trading in a fairly safe, yet limbo, state.

Wednesday and Thursday saw similar hesitations against the dollar, as investors await the Fed’s next move. Recently, the dollar has been performing well and the Fed hasn’t eased up on economic restrictions, keeping gold investors on their toes. More support has lately been headed in the greenback’s direction. China and Hong Kong have experienced some recent slowing of their economy, and investors waited expectantly all week to hear news of China’s refinancing policies.

So, as much as the price of gold dropped inversely to the dollar at the beginning of the week, it gained an equal amount in response to Friday’s news that China’s economic growth has fallen short of expectations. This report came a day after the Fed’s minutes reported no change in policy on Thursday, and gold saw a modest spike as investors took hope in the yellow metal’s recovery against a flailing yen. China reported a sixth consecutive quarter of losses, so Friday ended with a net weekly gain of about $6, as many believe the economic reports might spur the Chinese government into easing monetary rates.