Gold climbed from a 10-month low on Monday despite the US Dollar gaining ground. However, the recovery in Gold was kept in check by a rising US Dollar, with the two normally trading inversely with each other.
The rise in the precious metal follows positive forecasts for 2017 with many analysts predicting a strong turnaround in the year ahead. Having hit a 10-month low last week on a rising US Dollar, Gold saw gains on Friday which followed on to today’s trading sessions. Friday’s rises failed to prevent a a sixth straight weekly decline for the yellow metal as expectations for an increase in U.S. interest rates for the foreseeable future continued to weigh.
Certainly playing a part in today’s near half a percent gains, are bottom feeders snapping up nicely priced positions in the commodity having plummeted to a 10 month low. Another possible reason is regarded as the ‘Trump Effect’. President elect of the United States, Donald Trump has promised tax cuts which normally add inflationary pressures to the US Dollar. This will most likely cause an increase in government debt which will pressure the greenback further.
The first few months of the year normally see increases in the price of gold. The world’s two largest consumers of gold; India and China, have holiday festivals where gold is popular gift. Such is the level of demand that Gold generally posts an increase in the first two months of the calendar year.
At time of writing, Gold was up 0.33% with a troy ounce trading at $1141.45. Meanwhile the US Dollar index which tracks the greenback against a basket of six weighted currencies, was marginally higher, up 0.02%, valuing the US Dollar at $102.95.