Sharp drop in the price of gold before year ending
There has been a massive confusion into the mind of investors from the very beginning of the year 2016.Most of the retail traders in the financial world were worried about the pending interest rate hike decision by the FED. However, things have settled down to a great extent in the global economy after the U.S presidential election held on 8th November 2016.The green bucks got a major boost during the event of U.S presidential election held on 8th November 2016.After Mr. Trump become the newly elected president of the United States of America he stated that he is going to increase the fiscal spending from the very beginning of the next year. This created an extreme positive consumer sentiment and boosted the dollar in the global market.
The price of gold is measured in the dollar so when the U.S dollar index rallies high in the market the price of gold drastically falls. The U.S dollar index is the measure of the over value of the green bucks against the six major currencies in the world. In this year there has been a massive fall in the gold price since the U.S dollar gained significant bullish momentum in the market. However, the price of gold found a decent bullish momentum in the market after hitting the critical support level at 1121.63.This level is going to play an important role in the next movement of the gold price and the professional traders are thinking that the price of gold will be rebound from this level upon the weakness of the U.S dollar. Though the bulls of the gold market are extremely optimistic that the market will go higher in the near term future but leading economist suggest further downfall in the price of gold since the FED has a project for three rate hike in the year 2017.
After the FED hike, their interest on the basis of 25 points the U.S dollar index gained the strongest momentum in the market. It hit the 14 years high in the market but after hitting that level it suddenly slipped in the global economy. On that event, the gold price was trading near a critical support level and gained a strong bullish momentum in the market. However, the price of gold again found strong resistance in the 1162.50.In the last Friday, the price of gold again fell in the global market after hitting the critical resistance level. However, the price of gold had a year closing with 6 percent increase in its value. There has been a decent fall in the price of the silver market and it traded at $16.04 per ounce. The drop in the silver price was near about 0.17 cents or 1.10% in the global market. On the contrary, the price palladium, platinum, and copper steadily increased in the global market.
Most of the professional traders are currently staying on the sideline since the market has not given any clear indication to the trader. Some professional traders are telling that the market has already absorbed the bullish strength in the global market and in order to push the price of gold further lower the green bucks needs to come up with an excellent news release in the very beginning of the next year. Most of the professional gold traders are currently staying on the sideline since the dollar has not shown any significant weakness in the global market in the last week.All the gold investors are cautiously waiting for the next year since it might provide them excellent buying opportunity in the market but if the dollar retains its strength in the market then we will again see a strong bearish movement in the price of gold.
The year 2016 has been full of many major events. In the last FOMC meeting, the FED went for a rate hike and also proposed that they are going to implement three rate hike in the next year. But according to the leading economist three projected rate hike in a single year will be extremely difficult for the FED since they need to look at all the factors in their economy. If they go for immature rate hike then the green bucks will suffer hard in the long run. Moreover, the central bank will also force the FED for at least three hikes before the month of November in order to adjust the current inflation rate. Inflation rate adjustments extremely important for the economy of a country and if the FED manages at least two rate hike in the next year then we will see the green bucks broadly stronger against its all the major pair. The last two-month economic performance of the U.S economy was significantly great and most of the professional analyst are thinking that the dollar might retain its strength in the next year also.
So if you are thinking to buy the gold in the next year then you need to be extremely careful about your investment. The professional trader will be looking to buy the gold in the market with bullish price action confirmation signal and weak fundamental news release. However, in the next week, the price of gold might exhibit ranging movement in the market. The upcoming week has also very limited fundamental news release in the market that means the market will exhibit low volatility in the first week of week of January. But always remember that the market often exhibits large movement after low volatility period. So be extremely careful when you invest in the gold market.