The price of gold has been soaring for more than 2 weeks now as indicated in the trading patterns of the Asian market on Friday, October 13. This is a result of the weak U.S. dollar. The U.S. Commerce Department indicated that the prices provided by consumers rose less than analysts expected. This was both on a monthly and an annual time-line. In addition to that, separate reports indicated that retail sales were less than analysts had expected throughout last month. To add fuel to the fire, the Federal Reserve September Policy minutes from this week indicate that policymakers are still divided on the inflation of the U.S. dollar. In more detail, the U.S. dollar has reduced in strength by 0.27%. The value of the dollar affects gold prices immensely. When the dollar is weak, gold becomes less expensive for those holding foreign currency. Hence, it is affordable for them to buy. On the other hand, a strong dollar lifts the opportunity cost and makes it more expensive for them to buy. Currently, the Gold price extends gains on weaker dollar. Here is more about it.
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More about gold today
By the end of trading on Friday last week, the price of gold was pegged at between $1296.35 and $1296.65 per ounce (oz). This was an increase of $2.25. It was stimulated by the reduction in value of the U.S. dollar. Other factors have contributed to the rise in value of this yellow metal. Geopolitical conditions have stimulated its rise in value. Gold investors are tense abouta the escalating tension between the U.S. and North Korea. On October 9th, there was news that North Korea may be preparing to test a new, long-range missile that is capable of reaching the West Coast of the U.S.A. This caused investors to stock up on gold hence driving up its value. They are buying up a variety of gold types as described at https://goldira.company/us-gold-bureau. In addition to that, U.S. president Trump is moving very slowly on tax cuts. Hence, there is political uncertainty which has further driven up the price of gold.
A turnaround for the dollar
Despite poor performance last week, there is still hope that the U.S. dollar will recover. Some data released on Thursday showed that unemployment claims in the U.S. were down. Moreover, producer prices had a marked increase in September. This indicates that there is strength in the labor market and a signs of a wholesale reduction in inflation. As such, the Federal Reserve could raise the interest rates in December and prop up the U.S. dollar. This means that gold investors will have an opportunity to make profitable sales at the end of the year.