How do we relate the USA economy with the gold prices in USA? The answer is when the USA economy is not healthy; people buy more gold as they seek protection either from the economic crisis or inflation. Currently, US economy is quite stable. National Association of Business is expecting US economy to grow by 2.2 % in the year 2017.In September, their projection for 2017 was 1.6 %.These stats are bad for gold investors, because gold prices may fall more due to the good economic growth of the USA economy.
The higher interest rate with less impact on the gold prices in USA
When the Federal Reserve Bank announced hike in the interest rate. It was expected that it would affect the gold prices significantly. But so far so good! The higher interest rate has not affected the gold prices in the USA . An analyst at the New York gold market added, “The metal like gold hasn’t felt the affect since the changes in the interest rate”.
After 14-dec-2016 the gold rate was 1128 USD/OZ and today the rate is 1149.76 USD/OZ. So, the gold remained steady even after a historical change in the interest rate.
Good news for the oil investors but not so good for the gold stock holders. The oil prices are getting steady not only in the USA market but also in the international market. According to a recent report , the US benchmark West Texas intermediate oil prices edged up for a fourth consecutive week . The prices ended at $53.97 per barrel which is close to the year’s high price of $54.51. The black gold prices gained 25 percent rise since mid-November, thanks to the OPEC supply reductions.
The gold investors may turn to the oil due to the steady performance in the prices. The analysts are forecasting the same momentum in the upcoming week ahead of New Year Holidays.
The USA political story line is not in good shape these days. After the USA -China diplomatic conflict, USA escalates tensions with Israel as Secretary John Kerry Criticizing the Prime Minister of Israel of thwarting peace in the Middle East.On the other side, USA elected president Donald trump wants to ease diplomatic tightness with the Russia. The Russia is one of the main buyers of the USA gold. The gold investors are keeping a close eye on the USA diplomatic policies which are changing rapidly with every single day.
You can’t separate gold from dollar, interest rate, and the USA economy. All these factors are closely interrelated with each other. Same as the case with the USA dollar, this is getting strength day by day. Good time to buy USA dollar but gold investors may not feel safe due to this positive change.
Investors want Mr. Trump! The dollar is dominating in respect of gold because of the business friendly policies of the Donald Trump. The investors are anticipating higher interest rates and strong economic growth in the next year. The positive change in these policies will support the domestic currency.