Price of Gold Today Continues 2017 Rate Hike Rally

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The price of gold today (Friday, March 31) is up 0.4% to $1,248, continuing the metal’s strong rally recently.

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If you’ve been watching gold prices, you know the metal has blasted higher since the Fed hiked rates on March 15. Since then, gold has gained 3.9%, or about $47.

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Meanwhile, the U.S. dollar, stocks, and oil prices have been stalling. That’s reversed somewhat in the past week, but gold’s price action has remained resilient.

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3 Catalysts That Will Boost Gold Prices in 2017

Trump’s plan to repeal and replace Obamacare has failed, leaving some investors doubtful about the “dealmaker’s” ability to accomplish further reforms. Chief among those are promised tax cuts for businesses and individuals, which fueled the post-election market rally.

If the dollar’s strength was a combination of expected higher interest rates and an economy stimulated through tax cuts, perhaps traders are having serious second thoughts.

Are we getting dead cat bounces right now in the dollar? We just might be. I’ll discuss what this means for my 2017 gold price prediction.

First, here’s a recap of the day-to-day gold price movements this past week…

Price of Gold Today Puts the Metal on Track for a 0.4% Weekly Gain

After closing at $1,243 on Friday, March 24, gold prices opened the week sharply higher on Monday. Despite the dollar strengthening throughout the day, gold managed to settle at $1,254 for a 0.9% gain.

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Tuesday’s gold action fell victim to even more dollar strength, with the U.S. Dollar Index (DXY) jumping midday from about 99.25 to 99.75. The gold price actually rallied into the open at $1,255 but retreated to $1,251 to lose 0.2% on the day.

After overnight weakness, gold opened slightly higher on Wednesday at $1,252. Even as the DXY managed to regain the 100 level, the price of gold closed up 0.2% at $1,253.

On Thursday, March 30, the dollar pressured gold prices as it spent nearly the entire day above 100. Gold opened lower at $1,248 and kept falling as the dollar surged to 100.5. The gold price ended the day 0.8% lower at $1,243.

Now, the price of gold today has gained 0.4% and trades at $1,248. That puts the metal on track for a weekly rise of 0.4%.

It’s clear that the dollar rising above 100 has had the biggest influence on gold prices this week. When the DXY breaks above a significant level like that, gold investors tend to panic.

But this retreat is only short term. I see gold running much higher this year, regardless of the dollar’s long-term movement.

Here’s my target for gold prices in 2017…

My 2017 Gold Price Forecast

Following the initial surge early in the week, it’s been a few days of consistent profit taking. This led to some day-to-day volatility, especially as the dollar rallied higher.

This chart shows how gold’s nemesis has performed this week…

us-dollar-index-dxy

The gold price decline this past week has also been confirmed by negative momentum in the MACD indicator, which you can see in the bottom portion of the chart below…

gold-image-stockcharts

I suggested last week that since gold mining stocks had not followed the gold price higher, perhaps the gold price’s advance could stall out. That’s exactly what we’ve seen happen even as gold appears on track for a slight weekly gain.

Meanwhile, note that the price of gold remains above its 50-day moving average (blue line), and that line is gradually approaching the 200-day moving average (red line). Another bullish sign is that gold’s established a higher low between late January and mid-March.

It’s also interesting that even some of the “too big to fail” banks are finally jumping on the gold bandwagon…

According to Bank of America Merrill Lynch, a balanced portfolio should include 7.5% gold exposure. Its analysts said recently that inflation appears to have bottomed, which indicates that investing in gold can strengthen your portfolio.

The bank is calling for a $1,400 price of gold by the end of 2017 thanks to upcoming elections in Europe and protectionist overtones.

Interestingly, that’s the same $1,400 target I’ve been pointing to all year. If gold reaches that price target, it will have handed investors a 12.2% return from today’s gold price.

 

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