The price of gold could see substantial rise in the market as the U.S. Dollar index continue its path downhill in terms of value, which is forecasted by analysts.
The dollar has declined to almost 9 percent against a basket of foreign currencies to date as the likelihood of parts of President Donald Trump’s economic agenda is being put to action has been called into question, and the possibility of a further interest rate hike from the Federal reserve has once again subsided.
The dollar index could definitely drop to the 92 mark which is about 1.5 percent below its closing price on Wednesday of 93.40, as stated by Phillip Streible, the senior market strategist at RJO Futures. Though these levels are important to watch in the dollar, what’s more interest to him is the impact on gold prices and other commodities.
Gold rising to $1,300 per troy ounce will imply that about 4 percent of upside from its settle price Wednesday of $1,249.40.
As the relative value of the U.S. dollar declines, the price of gold and other dollar-denominates assets would typically rise.
The dollar index was trading near 13-month lows by Wednesday’s market close. The index has been consolidating in a range of about 92 to 100, pointed out Piper Jaffray chief market technician Craig Johnson.
This relative weak performance of the dollar has certainly helped base metals and pushed the energy sectors also quite a bit.