Gold prices are about to cap off one of the most volatile weeks of the year thanks to the June FOMC meeting.
As gold started to price in an all-but-certain Federal Reserve rate hike, it rallied to a one-week intraday high of $1,276 on Wednesday before the announcement. This surge had investors hoping it was the end of the recent gold price slump, which saw the metal tumble 1.3% from its recent peak of $1,293 on June 6.
But gold eventually closed lower on Wednesday and kept falling on Thursday, showing how the sell-off since June 6 wasn't over despite news that should've been good for gold. As Fed Chair Janet Yellen discounted weaker-than-expected inflation numbers, she opined that the stage was set for inflation to eventually move higher. High inflation typically means higher gold prices because the negative effects of inflation can cause uncertainty in the markets.
However, traders didn't budge. They chose to sell and lock in profits, so gold quickly returned to $1,260 by later that afternoon.
My advice, though, is to watch what gold does in the coming months. I think we could get to $1,300 gold faster than you may think. Beyond that, I think the metal could rally much higher as it gradually climbs out of its current gully.
Before I show you my year-end gold price target, here's a recap of gold's wild week…
How Gold Prices Performed Before and After the FOMC Meeting
After closing at $1,266 on Friday, June 9, gold opened slightly higher at $1,268 and moved sideways throughout the day alongside the U.S. Dollar Index (DXY). It eventually settled flat at $1,266 for no gain.
On Tuesday, June 13, the two-day FOMC meeting kicked off and sent the price of gold lower to $1,264 at the open. After falling to $1,260 early in the morning, it reversed higher to close at the same $1,266 level as the previous session.
Wednesday was the most volatile session of the week. Gold opened at $1,266, then soared to $1,276 early in the morning as the dollar plunged by 50 basis points.
This chart shows how the DXY has trended since last Friday…
The gold price then hit its peak of $1,278 around 11 a.m., before the dollar made a huge resurgence to the 97 level in the afternoon after Yellen announced the rate hike. This dragged gold down 0.5% to close the day at $1,260.
The DXY kept the rally going on Thursday as it rose to the 97.4 level. As expected, gold prices took it on the chin, opening lower at $1,255 and moving down to close at $1,254 for a 0.5% loss.
But the gold price today (Friday, June 16) is telling a different story. It's on track for its first gain of the week, up a modest 0.2% to $1,257. Still, the metal is set to post a weekly loss of 0.7%.
Must See: An incredibly rare gold anomaly is shaping up in the markets as we speak — one that has occurred ONLY twice in the past 20 years. And it's about to happen again. Details here…
Despite the Fed's clear responsibility for this week's sell-off, gold price volatility is typically only a short-term reaction to interest rate hikes. For example, the metal fell 4.1% in the two weeks leading up to the March 15 rate hike before surging 7.6% in the month afterward.
That's why I'm not too worried about this week's drop and expect the metal to reach this bold target by the end of the year…
This Is Where the Gold Price Is Headed 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.