In London, the gold prices were a little higher on Friday on the London spot market, but it is unlikely gold will get much higher because of the economic news in the United States. The dollar is stronger and there is incoming positive economic news, which means that the prices for gold will likely be capped in the coming weeks.
On Thursday when the good economic news came in, gold basically missed the mark on making any big gains, and oils and metals were pushed higher as traders began to not worry about gold. Gold is typically the safe haven when things are going wrong, but with the upcoming announcement of a possible interest rate hike and other economic booms going on, the investors and the traders were looking at gold as something that is not really needed right now, although it did make a small gain a week ago. A lot of commodities lacked any type of direction the past week, but gold was up a little on Friday, even though it was not much of a jump at all. Spot gold increased .32 percent which brought it at $1,126.20 in the European trade, which means a troy ounce. Gold is currently undergoing a consolidation right now as it moved pretty big a few weeks ago, and this means it is going to stabilize for a while.
Gold buyers are going to be looking at payroll numbers next week, which is going to be a key point for the economy, and it also will help signal whether or not the Federal Reserve will raise the interest rates in the middle of September. In terms of interest and dividends, gold does not pay that and it often lacks the qualities that other yield-bearing assets have when the rates begin to climb. Since the higher interest rates would also increase the value of the dollar, it would make it more unlikely that people would turn to gold, which also would mean that the prices would stabilize or possibly fall some in the coming weeks, but it really does all depend on what happens in the next couple of weeks and the economic data that comes in. There does seem to be an indication that the key interest rate hike will not happen until December, which actually should not do much in terms of the price of gold, although that could change depending on what happens in October and November as we get closer to the interest rate hike if it does not happen in September.
A lot of investors and analysts are saying that because gold has been holding at over $1,100, it means most people are pretty sure that an interest rate hike is not coming in September, even though there has been some good economic data within the past week. Part of this is the slowdown in China, because the Federal Reserve does not want to raise the interest rates with so much uncertainty in China, although there is an issue with waiting too long as well. Gold is basically in the middle of a guessing game with the Federal Reserve because until the Federal Reserve makes a move, it is likely to keep gold holding steady at around $1,000 or $1,100, and it should not move much away from that unless a catastrophic economic situation happens, which is fairly unlikely at this point in time. Even if gold does not increase much in the next few weeks, it does not mean that you should not invest in gold, as gold is always a good asset to have laying around, especially if you are someone who is new to the market and are not sure where to invest. With gold, even lower gold prices are worthy of something, so that is why often times people will still keep gold even in a good or great economy. For now though, it appears that gold prices both at home and abroad will be staying fairly stable as more economic data comes in and the answer from the Federal Reserve comes down about the interest rates in September.