Gold Still Dropping

gold stock chart dipping

Gold dipped further yesterday, on the surprisingly hawkish news from the FOMC meeting, which revealed that there will most likely be an extra rate hike in the coming year. Rather than just two, there are now three to look forward to.

The after-meeting statement made clear that some, though not all, of the members took into consideration the policies that will be enacted during the coming Trump presidency. Other factors, such as unemployment trends, were considered as usual. The bottom line, though, is that gold prospects are not looking very rosy at the moment.

Currently, the precious metal is trading in the low $1,140s. However, it breached the $1,140 support hold at one point to hit $1,139.10. There seems to have been a fairly general consensus that, should the $1,140 support get broken, then gold prices will almost certainly be headed for the next support level at $1,000 an ounce.

While that support is strongly expected to hold firm, the expected trend will significantly eat into the annual profits.

Gold prices peaked in July, at about $1,367 an ounce. With more than a 10% decline from that point, it’s obvious that a correction is underway. Still, before today, gold was still up 9.3% for the year. Of course, the DJIA was up 14% and the S&P 500 11%.

There may be, however, other surprises in store for gold prices. There is a small, but vocal, element which maintains that the stock market is experiencing the very same “irrational exuberance” which former Fed chairman Alan Greenspan warned about many years ago during the tech bubble.

Since none of the extremely radical political events in leading nations such as the UK and the US had the expected effect on gold, and the US stock market has risen to such heady heights, some notable investors are saying that the effect has only been delayed. It is possible, they maintain, that once Trump actually takes office and England gets closer to actually leaving the EU and the stock market removes its rose colored glasses, gold prices could shoot upward like a rocket.

Only time will tell.