Gold is on track for a 2.4% loss this week, but our long-term gold price forecast sees prices rising 14% this year.
Gold prices have been resilient in the face of bearish market forces this week, and I see that resilience continuing this year.
You'd think the Dow Jones hitting 21,000 would be enough to drag the price of gold back below the $1,200 level. If not, then maybe a rallying U.S. dollar might have done so.
But that hasn't been the case, as gold prices have been holding up well in the face of these factors.
The surging stock market comes on the heels of Trump's promised tax cuts to boost the economy. The Fed's talking up the odds of a March rate hike, and that's reflected in a stronger dollar. And the long-term gold price has remained strong, up 8.4% since the Fed's last rate hike on Dec. 14.
So what's going on? Well, it seems the gold market senses inflation. If the economy improves, prices will rise. The Fed is also gaining some confidence that inflation is coming back.
In addition to these economic factors, there's one technical gold price factor we're watching closely. In fact, this is the primary influence behind our gold price prediction of a 14% gain by the end of the year.
First, here's why the price of gold tumbled lower this week…
Why Gold Prices Fell 2.4% This Past Week
After closing at $1,257 on Friday, Feb. 24, the gold price opened lower on Monday, Feb. 27, at $1,255 due to wild swings in the dollar. Gold retreated lower that afternoon to close at $1,252 for a 0.4% loss from the Friday close.
Tuesday brought nearly the same kind of action in both gold and the dollar. The price of gold peaked near midday trading then backtracked 0.3% to close at $1,248.
The real action happened on Wednesday after Trump delivered his speech to Congress. His address sent the dollar toward 101.5 for the first time since mid-January.
Here's how the dollar rally looked from late Tuesday into Wednesday…
Naturally, that hurt gold prices for most of the day. But the gold price ended the day at $1,249 for a slight 0.1% gain. This surprised investors since both the dollar and Dow Jones notched record highs.
On Thursday, March 2, gold sellers got the upper hand as they took their cue from a rising dollar, which reached 102.15 by midday. Gold, which had opened at $1,239, was losing the battle, trading down 1.3% at $1,233 by the close of trading.
Gold Price Forecast: 6 Reasons Why Prices Will Post Seismic Gains in the Coming Years
As of this morning, the gold price today (Friday, March 3) is down 0.5% to $1,227. That puts the price of gold on track for a weekly loss of 2.4%.
The soaring dollar and unprecedented stock market rally have weighed down gold prices this week. Those two factors could continue to dominate the short-term picture.
But I'm convinced the long-term picture for gold prices is much more bullish. That's because one of the most important technical indicators for gold points to a 14% gain by the end of 2017.
Here's our gold price target for the end of the year…
Our 2017 Gold Price Forecast Shows 14% Upside Potential
About the Author
Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.