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Despite a slight decline this week, the price of gold in 2017 is still outperforming the stock market. Gold is up 11.5% on the year, while the Dow Jones Industrial Average is only up 4.1%.
Even with this week's drop, gold prices made the significant move of steadying above their multi-month resistance level around $1,260.
When gold pushed above that level for the first time last week, I asked if it would be enough to sustain its new heights. Since then, we've seen the gold price pop to $1,294, but then pull back to a low of $1,275 intraday.
Despite some bullish factors like a strong seasonal upward trend and geopolitical tensions, I said I thought we could see some near-term weakness first.
This past week's pullback supports my expectations that we could see a "test" of at least $1,260, where the price of gold's previous resistance has now become support.
Technically, there are some further indicators pointing to possible weakness in the gold price before it can finally move higher in a sustained way. I'll detail those for you soon.
First, let's take a closer look at gold's drop this week…
Gold Prices Decline 0.3% This Week
After closing the week at $1,288 on Thursday, April 13, due to markets being closed on Good Friday, gold opened slightly lower on Monday at $1,286. Despite a retreat in the U.S. dollar, the price of gold kept trending lower to close at $1,284 for a 0.3% loss.
On Tuesday, April 18, the gold price bounced higher as the dollar fell below the 100 level. By the end of the session, the metal was up 0.4% to $1,289.
Here's how the U.S. Dollar Index (DXY) – which measures the dollar against several other foreign currencies – has trended this week…
Wednesday saw the DXY regain some lost ground, which weighed heavily on gold prices. A choppy day's trading saw prices fall 0.7% to settle at $1,280.
Free Report: How to Invest in Physical Gold and Silver
On Thursday, April 20, sellers kept the gold price below $1,280 for a good part of the morning. However, buyers took over and brought the metal back up to $1,282 by the close. That marked a 0.2% gain on the day.
This brief decline lines up with my expectations that gold is due for a pullback. It's important to remember that this type of gold price movement is healthy when the metal is on a big rally.
And I expect gold prices to see a strong rebound by the end of the year.
Here's my gold price target for 2017…
My Prediction for the Price of Gold in 2017
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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.