Start the conversation
Gold prices continue to do what I've been expecting, as gold trades just north of $1,200.
But there's a case to be made that the gold price will only move higher…
For anyone wondering what may have triggered the big gold price sell-off since April, the answer may be a combination of U.S. dollar strength and emerging market weakness.
Should the dollar resume its overall downward trend, much of that could reverse and in turn provide support for gold.
Today, I'm going to show you that's exactly what's been happening for the price of gold over the last week.
Plus, I'll show you how gold's latest rally is fueling my newest gold price prediction…
How Gold Prices Reacted to the Dollar
The U.S. Dollar Index (DXY) was in a clear downward trend for the past week. The DXY started out very early on Monday (Sept. 17) slightly below 95, but sold off that morning to 94.5.
It would trade around that very level for the next two days.
That allowed gold prices to rise on Monday from about $1,194 to a morning peak at $1,204. But profit taking kicked in, and the metal dropped back to $1,201 by the 5 p.m. close.
As the dollar moved sideways on Tuesday (Sept. 18) and Wednesday (Sept. 19), so did gold. The gold price bounced from $1,197 to $1,204 over the midweek.
But Thursday (Sept. 20) brought another 50-basis-point drop in the DXY to about 93.90, and that powered the price of gold to a $1,207 close.
Take a look at the DXY's steady decline over the last week…
But on Friday (Sept. 21), buying returned to the U.S. dollar.
That powered the DXY higher from about 93.9 back to 94.25, though still far below highs from earlier in the week. As the proverbial fly in the ointment, these dollar gains pushed gold back to $1,193 by 9 a.m.
It then managed to see a little buying that pulled it back up to $1,199 by late afternoon.
Any clear direction would have to wait for later this week, likely in the wake of the expected Fed rate hike.
And I'm expecting that will support my bullish gold price forecast…
Where Gold Prices Are Heading after the Next Fed Rate Hike
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.