When gold Jumped over $1300 many people were surprised but I wasn’t. You see the fundamentals are there for gold to have an outstanding performance this year. In this post, I will explain the reasons why gold gets over the 1300 mark.
Why Gold Gets Over the 1300 Mark
There is not going to be an interest rate hike in the US probably till the end of the year. All this according to Janet Yellen. On the other side of the Atlantic Mario Draghi, the President of the European Central Bank will continue with his quantitative easing program all the way to the end of 2017.
The Weak Dollar
The weakness of the dollar will continue trading lower for the next few months. In addition, the US debt ceiling will have to rise again and this has to be approved by Congress.
The US Debt
Last time Congress was reluctant to increase the US debt ceiling and it took weeks of negotiations by President Obama to convince its members. If Congress does not increase America’s debt ceiling, then there is a danger for the US government to shut down.
Geopolitical Unrest
The North Korean President continues to cause concern to everyone, his neighbors are concerned, the US is concerned, the world is concerned and finally, the markets are concerned. Nobody knows how all this will end.
All these and more are responsible for gold’s rise above the $1300 mark. If we see effective closes above $1300 then we can be sure the 1350 mark for gold is very close. If the momentum is there and I think it is, then gold will definitely hit the $1350 mark.
Conclusion
The weak dollar has played a role in gold’s performance but it is not one of the primary causes. Both the Federal Reserve and the European Central Bank are willing to continue their monetary stimulus programs and this does not seem to change in the near future. North Korea’s President Kim will not change in the near future either. Full steam ahead for gold.