Gold Prices: Down They Go, Where They’ll Stop No One Knows

gold bars

2015 could be called “The Year the Federal Reserve Considered Upping Interest Rates” – an ongoing saga of an anticipated rate hike that sent markets, including the spot prices of gold and silver, into volatile and unpredictable price swings.  And in the last month of the year, the Fed finally made that long-awaited move of bumping interest rates to .5%.

The markets remain wary of the Fed’s actions and how the markets, the strength of the dollar and inflation rates will play out over the next few years remain to be seen, as does where the price of gold will settle out.

Gold’s complex role as a cultural symbol and placeholder of wealth in the investment world, combined with the market factors that pull its price to and fro makes the 2016 prediction of gold prices hard to pin down.

Here are a few factors that may come into play:

  • Oil has been going low, but how much lower can it go? Often tied to the price of precious metals, once oil bottoms out, so too might precious metals.
  • Can the nascent strong U.S. dollar withstand the economic struggles of Europe and Asia? While the dollar is looking stronger, how long can it stand alone as its global trade partners have near rock-bottom interest rates?
  • Can the Fed properly handle the interest rates to beat inflation? If they’re too dovish, could inflation get ahead of them?

Whatever the gold price may do in the upcoming year, there’s no doubt that the lower prices of gold make it a bargain time for new hedge investors to get started in gold investment.