January 2019 saw a significant increase in gold prices as investors sought a safe haven for their assets in the face of economic uncertainty. The price of gold hit its highest level in six months, with the precious metal closing at $1,288.20 an ounce on the final trading day of the month.
The average price for gold in January 2019 was 1.290,70 USD an ounce. The lowest was 1.280,28 USD an ounce while the highest was 1.319,71 USD an ounce. Average gold price in 2019 was $1,393.34.
The rising prices were driven by a number of factors, including global economic volatility, political tensions, and a weak US dollar. The US-China trade war, Brexit, and an economic slowdown in China all contributed to the uncertainty in the markets, leading investors to seek out safe, stable investments. gold prices, which have risen by $90 in the last six weeks, starting the year strong. The reasons for the increase are cited as a weaker US dollar, stock market uncertainty, and rising inflation, which have created a “perfect storm” for the gold price. A chart analysis is also provided, showing a downward trend for gold prices from April 2018 to August 2018 due to a stronger US dollar. However, from October 2018, the price started to recover, breaking above a trend line and reaching higher levels by the end of January 2019.
Gold prices declined on Friday and ended the week lower, but the precious metal still recorded its fourth straight monthly increase. Investors sought refuge in gold and other safe-haven assets in August as escalating trade tensions fueled concerns about global economic growth.
Adam Taggart, co-founder of PeakProsperity.com, commented on the trend, saying, “The precious metals market remains in a bullish trend, but it wouldn’t be surprising to see prices pull-back or consolidate after such a strong month, regardless of the stock market and the outcome of the China-U.S. trade deal.”
Adam Taggart, co-founder of PeakProsperity.com,
Adam Taggart also noted that the recent flexibility displayed by China in trade negotiations may only be temporary, as the country is focused on resolving the unrest in Hong Kong. He said,
“Given the unrest in Hong Kong, any momentary flexibility China is showing on trade is just a smokescreen—they don’t want a two-front war, and so they will continue to make positive trade statements for a while they work on restoring order in Hong Kong.”
Adam Taggart, co-founder of PeakProsperity.com,
He added that if any positive trade news causes a dip in precious metal prices, it presents an opportunity to buy rather than sell.
The precious metal has long been seen as a hedge against inflation and currency fluctuations, making it a popular choice for investors looking to protect their wealth. This is particularly true during times of economic uncertainty, when the value of traditional investments such as stocks and bonds may be more uncertain. Gold does not respond to rising or falling interest rates. It responds to negative real rates (Feds funds rate minus inflation). If rates are dropping as inflation is subsiding as we have seen during the 90’s, then Gold can perform badly. If inflation is picking up as the Fed is hiking very slowly, we can see gold perform very well. And I believe this is exactly the scenario we are in – inflation rising and the Fed is way behind the curve.
Despite the rising prices, many analysts predict that the trend will continue in the coming months. They point to the ongoing economic uncertainty, as well as the possibility of rising inflation and interest rates, as factors that could drive the price of gold even higher.
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