The gold price today has slipped about $9.60 to $1,066.30 an ounce. Gold is headed to end 2015 down about 10%.
Now that the year's most anticipated financial announcement - a U.S. Federal Reserve rate hike - is history, it's time to look at what's ahead for gold prices in 2016.
Contrary to what most expected, the gold price held steady after the Fed rate hike. Is that a sign of support for gold into 2016?
Let's take a look...
Recent Gold Price Activity
After the wild gyrations in the gold price in the days before, during, and after the rate hike, we continued to see a bit more of the same.
On Monday, Dec. 21, when oil futures actually dipped below $35, the gold price sank from $1,072 just before 8 a.m. to $1,067. The gold price ended up consolidating around the $1,078 level, where it ended the day.
Tuesday, Dec. 22, saw the S&P 500 close up about 11 points. But there was a bit more weakness for gold, which - for the most part - worked its way down steadily throughout the day from $1,078 to close near $1,072.
That followed through on Wednesday, as gold worked slightly lower from $1,072 to $1,070 by day's end. Traders were seduced instead by the S&P 500, which continued its climb higher from the previous day. It gapped higher at the open, at 2,051 to close at 2,064.
And here's what the action looked like in the U.S. Dollar Index over the past week:
It's interesting to note that, post Fed rate hike, the dollar index has basically traded downward for the most part, reaching just below the 98 level on Thursday, Dec. 24.
That same day the gold price saw a bit more vigor, moving up from about $1,072 to $1,075 by day's end.
Gold Price Today and What's Next
Today gold has slipped more than $9 an ounce, mostly dragged down by lower oil prices.
If we look at a macro view of what may move gold going forward, here are a few of the more interesting points of view...
Swiss bank UBS doesn't think we'll be facing another widespread sell-off of gold from physically backed exchange-traded funds (ETFs) like the one that happened in 2013.
The bank commented, "That gold ETFs are back to 2008-2009 levels suggests a lot of adjustment has already taken place. That holdings are more geographically diversified also suggests that ETFs outside the U.S. are likely to be more resilient amid monetary policy easing elsewhere and broader macro risks. While some more fine-tuning may still be in store, we expect this to be limited."
He said gold may have been declining as we approached the Fed rate hike, "but, if history is a guide, we should expect both rising gold prices and rising interest rates over the next few years... The last time the Fed raised interest rates was in 2004 to 2006. During these years, the Fed funds rate rose from 1% to 5.25% and gold prices soared from under $400 an ounce to over $700 an ounce - a 75% gain! Gold may be out of favor on Wall Street, but not on Main Street, nor across Asia where, led by China and India, private-sector gold buying of physical gold, including small bars and bullion coins, continues apace... Higher interest rates will likely undermine the much overvalued stock and bond markets, touching off a rush into gold by the same players who were eager to sell the metal in the past few years."
For my part, I'll continue to keep a close eye on both influences and developments in the gold market as we head into 2016.
In my view, it promises to be a pivotal year for the gold price. Stay tuned.
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