Tags: Money | gold | prices | stock market

How the Stock Market Affects Gold's Prices

By    |   Sunday, 12 July 2015 11:39 PM

The stock market and gold prices tend to go in opposite directions. When gold prices rise, typically, the economy is likely waning and aggressive investing slows.

In the current marketplace, for example, gold is caught in conflict, rising after word of a strong Consumer Price Index report in April but bumping up against a strong dollar and the Federal Reserve's likely interest rate hike, expected sometime later this year, according to MarketWatch.com.

“We see a battle in the gold market,” Taki Tsaklanos, who heads research at Secular Investor, told MarketWatch.

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Some think gold could enjoy a headwind, even in a sagging stock market moving ahead, rising alongside expected interest rate hikes.

Jeff Reeve in a MarketWatch.com column published May 28, noted "there is plenty of precedent for gold mounting a big multiyear run even during a period of significant rate tightening and a strengthening U.S. dollar."

Gold prices are typically cyclical, and analysts note that market investors should be aware that gold stocks can often trade higher than expected. Because of gold's broad and deeply stable place in the global marketplace, U.S. stock exchanges have little impact on gold prices, which tend not to rise and fall even as the market fluctuates. Gold prices, they add, are also closely linked to the value of a dollar. When that price dips, costs to buy gold rise.

Those investors considering gold stocks, according to the Motley Fool's Sean Williams, should consider three risk categories for such an investment: a rising U.S. dollar, financing risks related to mines and political instability incurred for gold miners in places like Africa.

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The stock market and gold prices tend to go in opposite directions. When gold prices rise, typically, the economy is likely waning and aggressive investing slows.
gold, prices, stock market
309
2015-39-12
Sunday, 12 July 2015 11:39 PM
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