The dollar had a huge gain of $1.28 or 1.72% on Friday, causing gold to tumble. Gold closed at $1,161.90 on the New York Mercantile Exchange on Friday. On Thursday gold hit a record high of $1,227.50.
So what is the reason for the sudden drop in gold prices? The department of labor announced on Friday that the United States job loss rates were down for the month of November. National unemployment dropped from 10.2% to 10% during the month causing the value of the dollar to increase and gold prices to drop $48.60 from the precious day close.
Healthy Financial Habits predicted last Monday that the market would have a correction by the end of the week. Sure enough, the correction came on the last day of the week. Friday’s dollar index DYX gains were enough to send the price of gold into a nose dive losing over 5% in a single day.
Gold prices have been soaring lately, breaking record highs almost daily. We believe that there is no doubt that gold will continue its upward momentum in the upcoming months and even years. Lately, gold has been escalating rapidly – almost too rapidly. With several weeks of unbelievable gains gold was inevitably headed for a correction.
There are several reasons why gold has increased in both popularity and value in recently. India and Sri Lanka’s central banks have both acquired substantial amounts of gold in the past month from the International Monetary Fund. This has caused investors to panic and increase their gold holdings.
Because the United States dollar is so closely tied to the price of gold it is important to mention that the US economy has played an important role in the recent increase in gold prices. Data released last month showed that private job loss is higher than expected and economic growth was lower than analysts expected.
Check back with Healthy Financial Habits every Monday morning for your weekly gold price predictions. Here you will find current news, information, and investment strategies that will assist you in making financial decisions. It is important to remember that consulting with a quality financial advisor is always recommended prior to making personal financial decisions.
Author: Mike Smitt