Why is the Gold Price Up 6.35% this Month?
Why is the Gold Price Up 6.35% in Sterling this Month?
It isn’t long after writing my gold forecast for 2016 that I am re-reading it and thinking how much more of it will come true.
As I had suggested in it, so far this year we have had middle-eastern rising tensions and poor data from China, two prominent aspects of my gold forecast that were set to boost the price. The one augury in my forecast that I thought would happen sooner rather than later was a Bank of England rates rise. In my mind the UK were going to have to follow the US sooner rather than later to keep the strength of the pound – but Mark Carney yesterday whilst speaking at Queen Mary’s University London, stated that an interest rates rise for early this year was off the cards. Understandably, as Carney cited yesterday, given the current attenuating global economy, the oil price dropping further combined with poor UK wage growth, an interest rates rise has been pushed back. It is possible that if the global economy conditions continue in this vein, a rates rise may well be set back further than expected: late 2016 early 2017. Click here to read Carney’s full speech here.
The gold price so far: Jan 4th – Jan 20th
In numbers the gold price opened on 4th January:
£725.019 / $1072.70 / €982.299 with currency GBP – USD at 1.4716.
Today Wednesday 20th January, the gold price opened:
£771.081 / $1093.20 / €999.726 with currency GBP – USD at 1.4158.
In total the gold price has moved: £46.062 (+6.35%) / $20.5 (+1.91%) / €17.427 (+1.77%) with currency -0.0558 (-3.79%).
With the Sterling price against the Dollar falling dramatically, with more pressure coming from the Bank of England announcement, gold valued in Sterling is likely to be given an uplift. For how far and for how long, remains to be seen. What I’m convinced of, more now than ever, if the US are intent on more rates rises (which traditionally after a rates rise after recession, more rates rise follow soon after), the US Dollar is going to run away and be overpoweringly dominant. It would not surprise me if a currency correction is in full swing.
Article by Michael Cooper