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The gold price looks to have leapt back up after last Wednesday’s dip down to below £900, but the question going into this week is:

Can gold hold?

The Fall & Rise

After heading downwards for months, the gold price landed at a long-time low last Wednesday, which saw a boost in investment buying. Thursday then saw the price rise back up like a phoenix from the ashes to the highest we have seen in months as stock markets fell. A sell-off in equities assisted gold and saw it jump by it’s biggest one-day percentage gain in over two years.

Gold is closely following the global stock markets, and these do not seem to be stable at the moment. U.S. stock indexes were heading lower at the end of last week, and the dollar weakened against it’s rivals, attracting interest in the safe haven of our favourite precious metal.

But can this price rise continue?

Keep a Close Eye

This week, investors will be watching escalating geopolitical tensions. Keep a close eye on the pound ahead of the EU summit on Brexit. Meanwhile, we will be closely following other global economics including Italy’s budget, and the ongoing trade issues between the U.S. and China. The upcoming mid-term elections in the U.S. may also have an impact.

We will also get the chance, this week, to review the minutes of the Fed’s September meeting where it raised interest rates for the third time this year. Incidentally - we may also be looking at another hike in December, which could possibly be a headwind for gold prices at the end of 2018. However, this could also lead to a lack of confidence in the central bank which may destabilise markets even more.

There are many uncertainties ahead, and we will have to wait and see how gold reacts to these. For now, gold seems to have regained some of it’s safe haven lure and remains supported by geopolitical tensions.

Will gold hold? We will have to watch and see.

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This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.

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