The gold price today (Friday, May 12) is up 0.5% to $1,230 per ounce. If it maintains that momentum throughout the session today, it will mark its third straight day of gains. That would be the longest winning streak since mid-April.
In late April and early this month, gold had clearly become a relatively hated commodity. From April 21 to May 5, the metal fell 4.8% to $1,227. The French election of "centrist" Macron elated markets and removed the attraction of gold as a safe haven, at least temporarily.
But now signs are emerging that the gold price retreat is possibly coming to an end.
After climbing to within inches of $1,300 in mid-April, gold began selling off. Both silver and gold prices have been testing multi-month lows, while gold itself could be in the process of getting a slight leg up. If that turns out to be the case, then we'd be looking at a bullish setup for the precious metal.
Additionally, other technical indicators on the fundamental and sentiment sides have become supportive of the price of gold, possibly pointing to strength in the near future.
And despite a victory for the status quo in France, gold's action in Europe and elsewhere has been quite telling.
Let's dive into the French election's bullish effect on gold prices. Then, I'll show you my bold price target for the end of 2017.
Gold Price on Track for 0.2% Weekly Gain Thanks to the French Election
After closing at $1,227 on Friday, May 5, gold traders waited on Sunday to see who would win the French election. The showdown was between centrist Emmanuel Macron and far-right candidate Marine Le Pen, with Macron expected to win by a big margin.
Essentially, gold saw what the polls saw, and expected Macron to win. The risk of a French exit from the EU ("Frexit") had disappeared for now. Still, the price of gold jumped to $1,234 late Sunday once Macron officially won.
However, Macron's win assured gold investors there would be no market volatility since there was no chance of a Frexit on the horizon. This dragged gold lower on Monday, May 8, and the metal eventually settled at $1,226 for a 0.1% loss.
In the last three weeks, the main French index, CAC 40, was up 8%, while Germany's DAX was up 6%. Clearly, European markets were expecting France to elect someone unlikely to upset the status quo, which the country did. That urged investors into stocks, which happened around the same time the gold price peaked.
As this chart shows, the U.S. Dollar Index (DXY) regained some strength this past week, rising over 100 basis points to 99.66, creating additional headwinds for gold…
On Tuesday, May 9, gold sank to its lowest since early March lows as the dollar rallied. Prices opened at $1,223 and kept falling throughout the day. They settled 0.8% lower at $1,216 by the close.
But the tides started turning on Wednesday as gold opened higher at $1,223. Despite some losses by mid-afternoon, the gold price managed to climb to $1,219 by the end of the day. That marked a 0.2% gain from the previous close.
Thursday continued the rebound with gold opening slightly higher at $1,220. It steadily climbed to $1,225 by the close for a 0.4% gain.
The price of gold today is up another 0.5% to $1,230, marking a third straight session of gains. According to data from FactSet, that streak hasn't been seen since mid-April. Gold is now poised for a weekly gain of 0.2%.
Right now, it appears gold prices are coming out of their gully now that the noise from the French election has mostly died down. I expect the metal to keep moving higher from here thanks to some strong fundamental factors that will stay important this year.
Here's how high the gold price could go…
This Is Where I See Gold Prices Heading in 2017
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.