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Gold prices have been in a narrow trading range over the last week, hanging mostly between $1,291 and $1,297 since Friday, Aug. 18. But the looming debt ceiling deadline could be bullish for gold...
The biggest gold news this past week was Treasury Secretary Steven Mnuchin's visit to the gold deposit at Fort Knox. This, of course, is the Kentucky army post that serves as the U.S. Bullion Depository and home of most of the country's gold reserves.
Treasury Secretary Mnuchin and Senate Majority Leader Mitch McConnell visited Fort Knox on Monday. We don't know how much gold they actually saw, but Mnuchin stated it was the first time the vault had opened up to outsiders since a congressional delegation and journalists had access in 1974.
In fact, inventory hasn't even been taken since 1986, and the last audit took place in 1953. All of this begs the question of why government officials would visit the site now.
Could the looming debt ceiling deadline on Sept. 29 justify a visit to America's gold? They might want to make sure it's all there just in case the United States can't issue more right now, and it will run out of extraordinary measures to keep the government solvent by the end of September.
But gold investors are positioned to profit from the controversy. I'll discuss how the debt ceiling debate could actually end up lifting the price of gold to my bullish target by the end of the year.
First, let's take a look at the gold price's 0.4% rise this past week...
Gold Prices on Track for 0.4% Gain This Week (Aug. 18 - Aug. 25)
While day-to-day movements have been uneventful, the metal is still on track for a weekly gain of 0.4% if it closes at the current $1,297 level.
After settling at $1,292 on Friday, Aug. 18, gold opened lower on Monday at $1,287 despite the DXY falling from 93.50 to 93. But the metal saw a strong recovery during the session and ended the day at $1,297 for a 0.4% gain.
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Tuesday saw the dollar bounce back, regaining all of the previous session's losses. By early morning, the DXY was back above 93.50. That weighed on the gold price, which opened lower at $1,285. Although the metal moved higher from there, it wasn't enough for a gain on the day. Gold prices settled at $1,291 for a 0.5% loss from Monday's close.
Here's how the dollar has trended since Monday, Aug. 21...
On Wednesday, Aug. 23, the price of gold dropped to $1,289 at the open despite the DXY also falling back in morning trading. But as the dollar fell below 93.25 later in the day, the metal steadily climbed to $1,295 by the close for a 0.3% rise.
Gold prices closed mostly flat on Thursday as the DXY traded mostly near the 93.25 level throughout the day. After opening sharply lower at $1,287, the metal moved higher during the session to close at $1,292. That marked a 0.2% decline on the day.
But the price of gold today (Friday, Aug. 25) is trending higher. It's currently up 0.4% and trading at $1,297. If the gold price closes at that level, it will post a weekly gain of 0.4%.
After a week of hardly any daily movement, now is the best time to look ahead to see how the dollar and the anticipated debt ceiling deadline could influence the gold price in 2017.
I think both the DXY and Sept. 24 deadline could provide a boost to the metal through the end of the year. In fact, here's precisely where I see gold heading by the end of Q4...
My Bullish Gold Price Target for the End of 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.