The future does not look so shiny for the yellow commodity. Despite the early surge in the first three weeks of this year, the price of gold could be a falling prey to the global market’s major predator – the heightened uncertainties.
Notably, the price of gold has been on the rise this year as investors turned to safe have due to a swirl of volatility in the market. The ongoing Brexit process, the start of the President Donald Trump era and the current political turmoil in Europe were some of the crucial factors on the rise of the precious metal.
But aside from these existing influences, there is another triumvirate that could be a triple threat for the fate of gold this year.
While the major equity markets in US cruised to their respective succession of record closes, including the 20 000 historical feat of the Dow Jones Industrial Average due to Trump’s protectionist stance, gold futures, on the other hand, may get hurt by this positive perspective for the US economy.
The US has reported a strong fourth quarter last year and Trump’s move to lower taxes and boost spending are expected to add more health to the country’s economy. This also means that dollar- which has an inverse relationship with gold – is doing well.
Rising risk assets could also spell doom for the safe have commodity as these are held as hedge against it. The last threat against the prices of gold is the possible interest rate hike, with Federal Reserve Chair Janet Yellen providing a hawkish remark about the hike.
Gold, no doubt, has done wonders to investors but can it continue its furious run this year?
Only markets can tell.