Price of Gold This Week Is Rallying; Here’s How High It Will Go

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The price of gold this week is trending upward after a volatile stock market correction in early February. While tumbling stocks temporarily weakened gold prices, the yellow metal is rallying again…

In fact, gold has regained everything it’s lost over the course of February. Last Friday (Feb. 16), gold prices touched $1,361 on an intraday basis, up from a low of $1,311 a few days earlier.

I believe gold’s quick comeback is just the beginning. As the spectre of rising inflation and rising interest rates continues to grow, we can expect gold to climb even higher.

Here’s a look at gold’s performance over the last week, including exactly where I think the price of gold is heading next…

The Price of Gold This Week Rises After Recent Volatility

Gold started Monday (Feb. 12) on a calm note, as stocks spent most of the day rebounding before closing flat for the day. The New York spot price for gold closed at $1,323.

On Tuesday (Feb. 13), gold mimicked stocks, as the S&P 500 gained on the day. However, the U.S. Dollar Index (DXY) turned bearish, spending the day below 90 and trending downward to reach 89.7 by 5:00 p.m. That helped gold eek out a small $1 gain on the day, to close at $1,329.

Wednesday (Feb. 14) was the week’s best day for gold. That’s when the metal moved higher by about $25, or an impressive 2%, just between 9:00 a.m. and 11:00 a.m.

Gold investors can thank a stronger-than-expected U.S. consumer inflation report for the bounce.

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January CPI rose 0.5%, considerably higher than the 0.3% consensus expectation. That meant a higher risk that the Fed would be unable to keep up with inflation as it raises rates, suggesting lower real rates, or even negative real rates, could lie ahead.

News like that is rocket fuel for gold, so the precious metal ended the day at $1,350, or $19 higher than where it started at 8:00 a.m. New York trading.

Thursday (Feb. 15) brought some mild gains in gold, as stocks continued to recuperate, and the dollar trended lower on balance. The precious metal opened at $1,350 and gained slightly to close at $1,353.

Friday would see gold backtrack after a strong week, as stocks declined, and the DXY managed a decent advance. The DXY rose from 88.40 in the early morning to reach 89.10 by 5:00 p.m.  As a result, gold retreated from $1,356 to end the week at $1,347.

On Monday (Feb.19), the shortened trading day was pretty uneventful. The DXY managed to run up from 89.10 to 89.4 by mid-morning, but then retreated back to 89.2. Gold chopped back and forth, but started at $1,346 and closed at $1,346 by 1:00 p.m.

Check out the DXY below, where you can see how it fell for most of last week before regaining some of its losses.

And here’s how stocks fared after the correction to start February.

However, last week’s gold price gains are just the beginning for this, really, and I’ll show you just how high they can go with my latest gold price target…

Here’s Where the Price of Gold This Week Is Heading Next

Last’s weeks gains leave gold in a pretty good place. As for the future, gold’s gains are going to be chiefly driven by the movement of the U.S. dollar.

Last week, I said the DXY’s recent bounce could see it go a little higher. But it’s already not behaving well and suffered a quick pullback to 88.5 shortly after. Right now, it looks like the path of least resistance for the dollar is lower.

You can see the dollar’s downward trend in the chart below.

And that’s great for gold. As the dollar grows weaker, gold prices tend to trend upward.

Despite its recent dip in late January, gold is on track for solid gains. Gold is now up 3.4% in just seven weeks since the year started. As and the dollar continues to trend lower, gold’s rally has the potential to climb higher.

My next gold price target is $1,365, a crucial level, as it’s the high reached in July 2016 since the gold bull returned in late 2015.

I think we could reach that target within a matter of weeks. After that, keep an eye out for $1,380, the previous high reached all the way back in August 2013. From there, just $20 more will bring us to $1,400, a psychologically important milestone that will test prices later this year.

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