Tuesday, March 27, 2018

Gold price soars but analysts are cautious to call bullish trend

The price of gold rallied last week – rising more than 3.0% to about $1,355 per ounce.  Several factors contributed to its strength:  anticipated spike in inflation as warned by the U.S. Federal Reserve following their hike in the benchmark interest rate from 1.5% to 1.75%; escalated talk of a trade war as the U.S. imposed tariffs against Chinese goods, followed by China reciprocating, and; the prospect of a more aggressive U.S. foreign policy which emerged after President Trump picked John Bolton, who is considered a foreign policy hawk, as his new National security advisor. 

Gold, which is considered a “safe-heaven” asset, and stocks, which are, by definition, risky assets, often, though not always, move in opposite directions. Last week, they did move in opposite directions, as the Dow Jones Industrial Average dropped by 5.7%.
Since mid-December 2017, the price of gold has risen by about 9%. However, some analysts are cautious to proclaim a new bull market for gold. Matt Maley from Miller Tabak (via cnbc.com) expects gold to break through the $1,375 per ounce level before he proclaims a bull market – if it does break that level, then expectations are for a gold price above $1,400/oz, the level last seen in 2013.

Ukrainian Credit Union Limited

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