The price of gold today (Friday, April 7) is at its highest level in nearly five months as investors buy safe havens in the wake of the Syrian air strike. As of 8:30 a.m., the metal is up 1.5% and trading at $1,272. That's the highest since prices closed at $1,273 on Nov. 9, 2016.
It's clear that gold's been acting well of late, despite some renewed strength in the dollar.
Meanwhile, stocks appear to be stalling, while oil prices have bounced back and 10-year Treasuries have gained as well.
If we look at the gold price performance over the first quarter, there's nothing to complain about. The precious metal gained 8.6% from Jan. 1 to March 31 and is currently up 10.4% on the year.
Compare that to just a 5.3% gain for the S&P 500 and you can see why gold is a great way to beat the broader market.
3 Catalysts That Will Boost Gold Prices in 2017
To be fair, one quarter doesn't make a trend. I expect gold miners will return to the mean and provide the leverage we're used to.
In the meantime, gold looks like it's fighting with resistance at its 200-day moving average, a level we'll have to watch closely for near-term direction of the metal.
Before I give you my near-term and long-term gold price prediction for 2017, let's take a closer look at this week's gold price rally...
Price of Gold Today Set to Cap Off a 1.8% Weekly Gain
After closing at $1,249 on Friday, March 31, gold prices opened slightly lower on Monday at $1,246. They rebounded throughout the session even as the U.S. Dollar Index (DXY) jumped higher. Buyers kept stepping up the rest of the day, pushing gold 0.3% higher to $1,253 by the close.
On Tuesday, April 4, the gold price opened even stronger at $1,260, within inches of its 200-day overhead resistance level. Although the metal trended lower, it managed to settle at $1,256 for a slight 0.2% gain on the day.
Wednesday was a turning point in the week as the price of gold finally caved to dollar pressure. The DXY popped, hitting a high near 100.85.
This chart shows how the dollar has trended this week...
The surge in the dollar caused a heavy sell-off for gold, which fell to $1,245 by early afternoon. However, it rebounded to close at $1,255 for a small 0.1% loss on the day.
On Thursday, April 6, the dollar regained some strength and gold softened. It opened at $1,252 and managed to keep steady around that level by the close, marking a 0.2% loss.
But the price of gold today shook off those losses with a huge pop following news that the U.S. ordered missile strikes on a Syrian air base. The metal surged 1.7% to $1,272, putting it on track for a weekly gain of 1.8%.
Short-term geopolitical reactions aside, it's important to examine gold's fundamentals to see where prices are headed. These factor into my bullish gold price prediction for the rest of the year.
Here are my short-term and long-term price targets for 2017...
My 2017 Gold Price Forecast
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The bullish gold price action since mid-March has pulled the metal back to the level where it peaked in late February.
As it happens, that peak was around $1,259, just shy of the 200-day moving average of $1,261...
We can see that gold prices have tested that resistance line three times since late February.
On the one hand, it's disappointing that it hasn't broken through that level. On the other hand, it's encouraging that gold keeps testing this level given how the dollar's been gaining traction.
If we look at gold developments on the international stage, there's been some interesting action in Turkey...
As the country approaches a landmark referendum on April 16, gold imports in March increased 17-fold to a total of 28.2 tonnes. That's because the proposed constitutional changes might redefine the nation from a parliamentary system to one with an executive presidency, allowing President Erdogan to benefit from more concentrated powers.
Interestingly, Erdogan encouraged his citizens in a December speech to use their fiat currencies to buy gold. That helped gold imports soar that month to nearly eight times what they were in the same month in 2015.
Needless to say, Turks are uneasy about possible changes coming to their nation, and they've turned to gold for protection in a big way.
For now, I think we could see gold continue to trade in a narrow price range as it builds strength to break through resistance.
Gold prices could make a run for the $1,280-$1,300 level by the end of this quarter. Further out, I expect them to rally to $1,400 by the end of 2017. That would be a 10% gain from the current $1,273 level.
Editor's Note: For only the third time in 20 years, a metal more rare and more exotic than gold is about to make stock market history. And it's poised to make early investors a lot of money. Get the full story.
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