How High Will the Price of Gold Go?
Gold saw competitive gains this week after the Federal Reserve eased back projections for how high interest rates would rise this year. Even with the dollar steadying after a five month low, gold saw an increase this week. On Wednesday the Fed announced a holding for the benchmark interest rate at 0.25 percent to 0.5 percent. It was also announced that odds of an interest-rate increase occurring in June plunged from 54 percent to 38 percent. Lower interest rates favorably increase gold’s competitiveness against interest-bearing assets. The Fed’s decision on lower interest rates implies weak economic growth and ineffective monetary policy, which creates an array of risks within the banking system that gold historically rises on. How high will the price of gold go? Some market strategists are conservatively projecting that gold will far exceed $1,300 this year.
Here is a look at the rise of gold year-to-date:
Markets around the globe are seeing similar patterns. Like the Fed, the European Central Bank and Bank of Japan are also adopting aggressive stimulus policies that are affecting the strength of the dollar and other currencies and bolstering gold’s gains. As the euro fell this week, the ECB warned that interest rates could likely be further slashed, which would lead to further weakening in the Eurozone.
Silver is also seeing gains this week being up 4 percent. It is at its highest since October of last year. With gold up 18 percent this year it is no surprise there is added interest shifting to silver as well.
Here is a look at silver’s move year-to-date:
As always, I encourage you to speak with your broker at RME for more market updates. For those in the Phoenix area, there are still seats available for our upcoming seminar at KTAR Studios on March 31st. You can register to attend or call to register at 602-955-6500.