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Gold Price Hits 11-Week High; What to Expect This Week

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Gold hit an 11-week high, opening Monday at $1,223.50 and climbing steadily all morning. By the afternoon, it had risen another $12. Interest in gold was spurred by a weak dollar and last week’s mixed US jobs numbers that “muted expectations for near-term interest rate hikes,” according to Reuters.

A look at the past two weeks shows some volatility in gold prices, as Trump’s executive orders and FOMC meetings impacted market expectations for the future. Trump’s first week in office saw gold drop almost $30 after Trump announced changes to Obamacare and construction of the wall. Also impacting the price was the Dow’s record-breaking week hitting 20,000 points.

gold prices graph

The beginning of Trump’s second week saw a much different response from investors coming off the travel ban and national protests. Anxieties over a weakening dollar and international reactions to the ban fueled a move into safe haven assets like gold and silver.

The FOMC’s monthly meeting kept prices stable until the announcement Wednesday that they would pass on another chance to raise interest rates, which began the steady climb in the price of gold that’s carried over from the weekend and continues today.

The latest political battle for Trump began with his executive orders last Friday to scale back financial regulations by overhauling Dodd-Frank. The changes are likely to include the Volcker Rule, which concerns making certain kinds of speculative investments that do not benefit their customers and removable of the DOL’s fiduciary rule, which ensured financial advisors worked in the interests of their clients.

Deregulation is always a good thing, and the Dodd-Frank overhaul has strong Republican support. However, Trump hasn’t shown a particular knack for successfully rolling out new policies, and investors are likely to wait longer for signs of success before pricing in the deregulation, which is likely to send asset markets and the dollar higher.

 

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