Gold prices have taken a real beating over the last few months.
After hitting a high in April of $1,360, gold prices have fallen over 11%, breaking into correction territory and shattering December's low of $1,248.
However, the precious metal is about to stage a dramatic turnaround – and make a killing for gold investors in the process.
You see, after months of falling due to pressure from the U.S. dollar, there are clear indicators that the dollar is about to ease off, creating a tremendous upside for gold.
Here's a close look at the factors driving gold's bottom and why it's heading higher next…
Gold Prices Indicate a Rally Is About to Begin
Gold moved very little in the beginning of the week. On Monday and Tuesday, the precious metal traded between $1,218 and $1,225.
However, prices really moved following the Federal Open Market Committee (FOMC) meeting.
As expected, the Fed kept its benchmark rate range between 1.75% and 2%. Its statement cited continued labor-market strength and rising economic activity since its last meeting in June.
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According to the meeting's minutes, "Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low. Household spending and business fixed investment have grown strongly."
Despite the meeting's positive outlook, markets reacted negatively to the FOMC's commentary – stocks, bonds, and gold all fell that day. The all-important 10-year Treasury yield crossed 3%.
However, the U.S. Dollar Index (DXY) rose to 94.65 following the release of the minutes, pushing gold from $1,217 to $1,221.
You can see the DXY's rise in the chart below:
On Thursday (Aug. 2), the dollar index momentarily broke above 95 as news emerged that the United States was threatening to impose additional tariffs on upward of $200 billion worth of Chinese goods.
While this buoyed gold prices for a while, the precious metal ended Thursday at $1,217, pushing gold futures to a one-year low.
On Friday (Aug. 3), wage inflation and an underwhelming jobs report pushed gold down to $1,204. While gold staged a small rebound and closed at $1,213, the metal's overall performance last week doesn't give investors much to celebrate.
However, there was one key indicator that gold's dog days are on their way out – and profits are about to return…
This Indicator Shows Gold Prices Climbing in 2018
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.