Anybody who follows gold with any consistency understands how crucial the rate of the dollar is relative to the cost of gold. If the dollar dips, its gold that benefits. Will the precious metal see a strong dollar in 2018, particularly as the Federal Reserve looks primed to raise interest rates yet once again?
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There are a few familiar methods of gauging the chances for gold– looking at both the strength of the dollar and the self-confidence in the economy, not to mention the capacity for the Fed to move– but lets bring in a number of these variables for a thorough take a look at golds possible performance for 2018:
Tracking the Dollar Index at the End of the Year
Initially, some context: the U.S. dollar is ending the year with an up-and-down quarter. See the chart below, courtesy of MarketWatch.com:
Its true that the just recently passed tax expense might influence some confidence in the markets, especially with the strong year 2017 just had in the lack of these tax cuts. But thats no forecast of whether or not the dollar will tighten up or loosen up, or whether markets might head south in 2018.
An Average Gold Price Slightly Higher in 2018?
Although each of these indications are difficult to read, there is some optimism out there– although it seems light for the minute. The most apparent example is the recent BMO Capital Markets report that sees gold moving to about $1,280 per troy ounce in 2018 … which is not far from its possible closing mark here in 2017.
If gold dips down better toward $1,200, this might represent a positive forecast that recommends gold is underestimated at the time. If we see those costs early in 2018, it may be a good time to purchase, specifically if the patterns in 2018 reverse the patterns we saw in gold for 2017– particularly, a strong year for gold shortened by some lukewarm returns in the latter half of the year.
Golds dip during the blossoming strength of the dollar on that chart is apparent– however thats not news to anyone who sees both markers on a regular basis. Whats clear from this chart, however, is that the dollars private quarter performance is not exactly connected to the exact machinations of whether or not the Federal Reserve is raising rates of interest. That could be a powerful insight, particularly in the very first quarter of 2018.
What to Expect from the Federal Reserve
Some experts hypothesize that the Federal Reserve might raise rates of interest as much as 3 times next year– however smart financiers understand that these projections do not constantly exercise in truth. It may be that the economic conditions next year do not lay the foundation for those 3 walkings in the Federal Reserves minds. Jerome Powell, future head of the Fed, is expected to work much like his predecessor in the role, theres just no informing what takes place in 2018.
Here is an excellent short article regarding the gold price forecast. Anybody who follows gold with any regularity understands how important the cost of the dollar is relative to the cost of gold. That recommends only a small gain for gold, but it doesnt necessarily mean that investors cant ride their method to higher prices with the appropriately-timed buys. If gold dips down closer towards $1,200, this might represent an optimistic forecast that recommends gold is undervalued at the time. If we see those costs early in 2018, it may be a great time to buy, specifically if the trends in 2018 reverse the trends we saw in gold for 2017– particularly, a strong year for gold shortened by some lukewarm returns in the latter half of the year.
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