Important Gold Signals This Week

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gold bar and stock chart

Economic uncertainty has always been the biggest factor driving investors to the safe haven of gold. But neither Brexit nor a Trump presidency has achieved anywhere near the bull market that was predicted. So now what?

Well, gold prices are influenced by several factors, and there are a few other important things that gold investors will want to consider at the moment.

Support Points

Last week was the fifth in a row that gold prices dropped. It is currently trading at around two or three dollars above $1,160 per troy ounce. Today, prices hit a high of about $1,166.70 and got down as low as $1,151.10. The next two support points are $1,140 and $1,000. If the first gets broken, it is almost certain that prices will drop to the second.

Dollar Strength

While gold does not always exactly track the dollar, it does so often enough to be a major factor to consider, and it has certainly been doing so lately. Last week was also the third in a row that positive bets on the dollar increased. Net longs are now the highest they have been since January.

Fed Meeting

So, you have gold plummeting and dollar floating higher, and you may be wondering how to tell when either of those things might change direction. The natural instinct would be to look for some kind of catalyst, which may have a major effect on one or either of those progressions.

The upcoming Fed meeting on Wednesday might be exactly what would fit that bill. Everyone seems to be certain that the Fed will raise rates by 25 basis points, and that is what is built into the market. However, no one is quite sure of what the after-meeting statement might signify for the future.

It would not be altogether unsurprising for the Fed to try and limit the dollar rising any further, and a dovish statement to offset the rate increase might just be the trigger gold prices are waiting for.

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