Will Gold Prices Continue to Rise Above $1,300 Per Ounce?

For the first time in over 15 months, the gold price briefly rose above $1,300 per ounce on Tuesday (4:00 p.m. EST) but dipped under, to $1,278.65 on Wednesday (12:52 p.m. EST).

Despite the fall, over a 30-day period, the yellow-metal has steadily inclined – rising from $1,222.30 per ounce on April 6 to $1,300.30 on May 3 – to $1,277.30 on May 4.

The decline in the gold price fell on the strength of the US dollar and weaker oil prices, according to kitco.  

Despite Wednesday’s fall, Reuters reports the overall incline of the gold price is in part due to the United States’ payroll report falling short of forecasts, dampening interest rates and weighing on the US dollar.

In the past week alone, the gold price has benefited greatly due to a weaker dollar. This is in part because the Federal Reserve has kept short-term interest rates and has no plans to raise them in the weeks ahead, according to the Wall Street Journal.

US jobs data impacts gold price

Nasdaq reports investors are hopeful the monthly jobs data, which will be released on Friday (May 6), will provide insight to the state of the US economy and a potential increase, and says higher rates tends to weigh on the gold price.

Last month, Reuters polled a panel of 30 gold analysts at banks and trading houses, which returned an average gold price forecast for 2016 at $1,209 an ounce. This is up from $1,118 done in a similar poll in January of this year.

The survey showed gold prices are expected to steadily rise over the year with a peak average of $1,250 an ounce in the fourth quarter, but won’t hit $1,300 again until January 2017.

Matthew Turner, senior precious metals analyst with Macquarie, told Reuters the key supportive factors are the shift in the Federal Reserve’s stance, a weaker dollar and the prospect of inflation.

“The first two have raised the base price, the third is why we expect higher medium-term prices,” he said.

Other metals expected to increase

Although gold has risen by 16 percent so far in 2016, it isn’t the only metal expected to move in a positive upswing: the year’s forecast for the price of silver is also expected to rise by nearly 5 percent, peaking at about $16.00 in the fourth quarter before averaging at $16.50 an ounce in 2017, according to Reuters.

While some experts say the gold price won’t rise above $1,300 an ounce until next year, others claim it could go as high as $1,500 an ounce by mid-year and bolster the price of silver.

John Butler, vice president and head of wealth services at GoldMoney told mineweb, “We’ve seen a rising trend range in dollar terms for nearly 6 months. If the current momentum continues, we could see gold over $1,500 an ounce by mid-year.”

Since the cost of gold has been steadily inclining, it’s expected that investors will start buying back into the yellow metal, according to Bloomberg.

Company gains

On Wednesday, Roxgold (TSXV:ROG) rose to $1.26 from approximately $1.24 the day before, an increase of 0.80 per cent.

However, Kaminak Gold (TSXV:KAM) dipped to $1.66 from $1.85, a loss of 8.79 per cent. Continental Gold (TSX:CNL) fell from $2.47 to $2.39, a decrease by 13.41 percent, however the company recently announced it has entered into an agreement with a syndicate of underwriters co-led by TD Securities and Clarus Securities, according to a news release. The two companies will purchase 10,000 units from KAM at a price of $2.50 per unit for a sum of $25 million.

Other company gains included Northern Vertex Mining (TSXV:NEE), which saw a rise from $0.365 to $0.37, a 2.78 percent increase.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct or indirect investment in any of the companies mentioned in this article.

Editorial disclosure: Northern Vertex is a client of the Investing News Network. This article is not paid content.

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