Gold , Dollar and the Uncertainty

Uncertainty is at paramount level enveloping the global financial markets with a thick cloud over the future course of stability and growth. Many economic and political events are lined up in this year which are causing more unrest among the investors raising concerns over the short medium term outlook of the equity/commodity markets for returns as well as investment opportunities.

Gold which is, perhaps now can be regarded as the second best option to fight uncertainty has been on the rise since 2017 started, but here lies a key confusing element of price movement when compared to dollar which is still hovering near its all time highs but yet the gold demand seems to spur and the prices are going northwards irrespective of the higher dollar. This move defines the markets have digested the stronger dollar and thus its making low to no impact on the Yellow metal as well as other dollar denominated commodities.

Dollar which has been on a tear since the last U.S Federal policy which increased the interest rate pushing the dollar index to all time highs is having no clear impact on either metals,oil or equities rather these three are pushing higher. Dollar is regarded as the safe haven in today’s scenario but the appeal though attracting investments, it is still not much conclusive seeing the price movement of Gold and other precious metals although another 5% rise will definitely change the perspective which is lingering at the moment.An argument is still on that prices of precious metals may not increase much if the dollar remains strong which it will seeing the incoming turbulence in the coming months.

Current scenario is suggesting large funds are flowing into Japan , America , Europe whereas the emerging markets are actually seeing a sell off.
Indian market is battling with its own set of problems caused due to demonetization and the road ahead with the yearly budget round the corner.

Trades are a bit tricky as there is a chance to get chopped on either side that is get trapped on either of the call of going long or short given the unorthodox price movements.
Gold can be bought on dips as the price might not see the lows due to the rise in global uncertainty and the lined-up political events in this year.
U.S Fed has pointed out at 3 rate hikes in the current year this weekend which might lead to even more stronger dollar though it is facing resistance at higher levels.

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