After a strong start to 2017, with prices firmly above $1,200, gold futures per ounce finally began dipping back under that $1,200 threshold recently. Wednesday, March 15, 2017, was an excellent day to be trading gold futures online.
Gold experienced a sudden surge in price following a Federal Reserve announcement about the potential for future increases in the prime rate this month. Typically, gold slides when the Federal Reserve increases the prime rate. This move typically strengthens the dollar, but the opposite happened in trading yesterday.
The Federal Reserve decided to increase the prime rate by a quarter of a percent. While that amount may seem minuscule, that can be the difference of thousands of dollars over the course of a mortgage. The small adjustment, partnered with an assertion that the rate would likely only be adjusted twice more during this upcoming year, seems to have had the opposite impact on gold than a rate hike usually would.
Federal Reserve Announcement Weakened the Dollar
As we often see in investment markets, when the dollar loses ground, gold quickly moves up. The dollar floundered after the announcement by the Federal Reserve, losing some of its strength compared to other world currencies and investments.
As is typical, this resulted in a boost to the price of gold. When investors do not feel strongly about the United States dollar, they tend to hedge their bets in more long-term investments, such as precious metals. Most people see gold as a resource that will hold value well, even in situations of sudden currency inflation or deflation, which helps investors diversify.
Some market analysts believe that this shift signifies the market finally adjusting to Trump’s presidency, which could have longer-term impacts on investments.
It is unquestionable that other economies exert influence on the price of gold domestically. Only time will tell, however, how Chinese policy, Indian protectionism in gold purchasing and other international events will impact the value of gold over the upcoming months.
Fluctuating Gold Prices Make Now a Great Time to Trade
If you aren’t already doing so, the ups and downs of the price of gold make right now an ideal time to consider trading gold futures online. When prices surge up substantially in one day, selling at the peak or near-peak of that upward trend can result in financial gains. Trading gold online via a Forex platform is simple, affordable and convenient. Consider giving it a try today!
