Q1-2016 Closes as Gold’s Best Gaining Period Since 1986

03 Apr
Gold in Q1

Q1-2016 Closes as Gold’s Best Gaining Period Since 1986

Stronger Dollar-Eurozone Fears

Gold’s Best Gaining Period Since 1986- Q1 Closes with Strong Gold Outlook

source: bloomberg.com

As the stock market and dollar retreated this week, gold prices edged higher, finishing the quarter with a 16 percent rise. Despite some slowing from market correcting through March, we witnessed gold’s best gaining period since 1986. On March 29, The Fed Chair, Janet Yellen, announced caution against raising U.S. interest rates, which, accompanied by a lagging in overall global economic growth, contributed to gold’s rallying.

Why this matters to gold investors: With Yellen announcing cautionary monetary policy, the dollar will weaken further against gold. Uncertainty in the financial markets is generally a buoy for gold prices, and worries over China and an expected rise in inflation will further contribute to a rise in gold prices. These are prime market conditions for investing in gold ahead of further expected gains.


Gold Mint at Europe’s Heart Says Sub-Zero Rates Buoy Sales

European Central Bank negative interest rates

Negative interest rates in Europe are driving gold prices as well. A spokesperson for the Austrian mint spoke this week about demand continuing to rise throughout 2016. With the Euro zone still recovering from recent financial turmoil, high unemployment in some EU countries, the negative interest rates and the psychological impact of the refugee crisis and recent terror attacks, gold is seen as a safe haven investment. The Austrian mint has seen a 45 percent rise in gold and silver coin sales since last year.

Why this matters to gold investors: A weakening euro, like the dollar, will lead to a strengthening of gold. The European Union’s very existence is under dire pressure as it grapples with imminent economic and security threats with the chances of amicable, effective resolutions among its member states becoming difficult to realize. If demand for gold as a precaution against future threats in Europe continues to rise, this will spur the price higher around the globe.


Besides the Fed, What is Driving Gold?

In this Bloomberg interview below, precious metals analyst Suki Cooper describes the rise of gold, Fed policy, market correction and the Chinese market:

Why this matters to gold investors: Cooper (along with other analysts) believes gold could hit $1,300 this year. The market has been correcting even as monetary policy and other economic factors have been driving the prices up this quarter, which is positive for sustained further growth. Without these market dips, the gold rise would have the potential of developing the “weak lungs” Cooper describes.  With such positive projections for gold this year, investors should take advantage of recent market corrections to invest in gold now.


Here are some articles from the web discussing the topics in this week’s post:

Gold’s Best Gaining Period Since 1986- Q1 Closes with Strong Gold Outlook
http://www.reuters.com/article/global-precious-idUSL3N17352H

Gold Mint at Europe’s Heart Says Sub-Zero Rates Buoy Sales
http://www.bloomberg.com/news/articles/2016-04-01/europeans-concerned-about-future-buy-gold-austrian-mint-says

Besides the Fed, What is Driving Gold?
http://www.bloomberg.com/news/videos/2016-03-29/besides-fed-policy-what-else-is-driving-gold


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

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