Gold has broken the $1,300 an ounce key resistance level that has held since October 2016. Today the metal trades at $1,324.
This rise is being attributed in part to a weakened dollar after the head of the European Central Bank refrained from talking down the euro at a high-profile meeting of central bankers.
“At the meeting in Jackson Hole in the U.S. state of Wyoming, the ECB's Mario Draghi said the bank's ultra-loose monetary policy was working and the eurozone's economic recovery had taken hold, refraining from commenting on the euro's recent strength.
“That was enough to push the euro to its highest in more than 2 1/2 years against the U.S. dollar while the dollar index (DXY) fell to its lowest since May 2016.”
“The bigger factor, in my opinion, are the long-range missiles capable of carrying nuclear warheads that were launched on Tuesday by North Korea that sailed over Japanese territory.” says Andrew Packer, Newsmax’s editor of the Resolute Wealth Letter and author of a new gold book to be released in December, “Trump $5,000 Gold: How to Profit From Gold’s Next Explosive Rise!”
President Trump is likely going to push to impose harsh sanctions on Chinese banks that continue to provide a financial lifeline for North Korea. While sanctions have been imposed on small financial institutions already, the biggest banking connections remain large state-owned Chinese and Iranian Banks.
“If the president goes after the larger Chinese banks, there is a chance that the Chinese will both respond by selling large amount of its foreign reserve of U.S. dollars and by doing so weaken our currency,” says Packer, also a Newsmax Finance Insider.
President Trump, according to Packer, “would love to further weaken the dollar versus the currencies of our biggest trading partners to reduce what he has called ‘massive trade imbalances.’”
AP also reported . . .
“At Jackson Hole, U.S. Federal Reserve Chair Janet Yellen made no reference to U.S. monetary policy but instead focused on financial regulations, leading traders to expect interest rates to be raised more slowly.
“Gold is highly sensitive to rising U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced.”
Packer insists: “When you consider both the likelihood of more downward pressure on the U.S. dollar resulting from the North Korean, Chinese, and U.S. political concerns, and the Federal Reserve’s sluggish action on raising interest rates, the upside for gold looks very likely.
“I’m expecting gold to rally and challenge the $1,500 resistance level sometime in 2018. And I wouldn’t be shocked by a run that brings it to $1,750 by the end of next year.”
(Newsmax wires services contributed to this report).
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