The Direction of Gold Could be Varied as Dollar Predicted Considerable Shifts in 2017

The Direction of Gold Could be Varied as Dollar Predicted Considerable Shifts in 2017

Gold enjoyed a modest rise over the course of 2016, with occasions of significant volatility adding to its increase.

With gold enjoying consecutive weeks of increase over the period leading up to Brexit, in which it 6 week increase in value, rising from a low of $1.199.90/ounce at the concluding trading week of May, and increasing to a high of $1,374.98/ounce in July, it became obvious just how susceptible the commodity is to political volatility.

However, the direction of the precious metal headed downwards in response to the U.S. election result, as the dollar increased in value, pushing the price of the commodity up for holders of foreign currencies, as gold is a dollar-denominated commodity.

The direction of the economy to be assumed by the new U.S. administration is still being considered by many analysts. However, promises of significant stimulus as well as a deeply protectionist stance, particularly in regard to manufacturing have aided in pushing the dollar up, and gold consequently fell in the opposing direction.

It remains to be seen how the imminent Trump government will conduct the economy, however the dollar is predicted by many traders and analysts to be subject considerable volatility, and thus the price of many dollar-denominated commodities, such as gold, could vary just as considerably.

 

Chart from: https://www.dailyfx.com/gold-price

Showing daily fluctuations in the price of gold.

 

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