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Just in the first month of 2017, the demand for precious metals have elevated. Let’s look at some main factors:
1. Major Inflows
The Gold prices have increased 5.2% in January, $1,201.07 per ounce; after falling 13% over the previous three months. In addition, the 10 primary money-drawing EFT’s such as Vaneck Vectors Gold Miners EFT (GDX) and Xetra-Gold EFT( 4GLD) which records the stock of gold miners, enticed nearly $1.6 billion in the first month of the year. The US gold futures climbed 0.53% to $1,200.1.
Concurrently, the spot silver was up 0.47%, to $17.19 per ounce, while platinum rise 0.33%, to $988.59 per ounce.
2. FED’s Settlement
The meeting of the US FED on Tuesday and Wednesday left the interest rates unchanged. Although, The Federal Reserve sent signals as many as three rate rises back in December; keeping its benchmark interest rate between 0.50% and 0.75%. In this case, if the FED raises the interest rates, it will mean stronger US dollar, making precious metals such as gold more expensive for other currency holders, potentially restraining demand.
3. Global Uncertainty
Apart from the impact of Donald Trump’s immigration policy and its effect on the US dollar, the global uncertainty including, Brexit, Eurozone crises, Iran’s President Hassan Rouhani and Trump’s nuclear deal tension, Israel’s reaction to Iran, China’s shaky overhaul and rising terrorism. Uncertain outcomes of coming elections, referendums, learship overhauls seem to be depressing business activities across the world. In addition, the changing economic policies have also started to create concerns in the finance world and in central banks. All these are causing concern in economic officials around the globe as its restraining investments and boosting market volatility.
In conclusion; the continued uncertainty encircling Trump administration is expected to encourage the yellow metal over the short term as global equities endure under tension. Although, for gold prices to reach higher numbers than $1,205 per ounce, it needs constant feeding from political uncertainty or increase in geopolitical tension.
