Yahoo Finance Factors investors should watch for gold price direction
Key indicators to watch closely for direction on gold prices (Part 1 of 12)
Gold performance
Gold prices have recovered somewhat from the 2014 low of $1,142 per ounce in the beginning of November. Now gold is trading at $1,194 per ounce. But even that is a decline of ~16% from the peak it reached in March 2014.
Indicators
In this series, we’ll explore factors responsible for this recovery and some factors that investors can track to get the sense of gold’s price direction. Investors usually view gold as an inflation hedge. As a result, gold prices are influenced by the following related factors:
Macroeconomic outlook for the United States and other world economies
Performance of alternative assets such as equities, bonds, and the U.S. dollar
Interest rates
Inflation
We’ll discuss how U.S. data versus the rest of the world impacts the U.S. dollar and thus gold prices. We’ll also explore the recent vote on a Swiss referendum and its fallout on gold prices. We’ll discuss factors such as the U.S. labor market conditions and inflation and inflation expectations, which are the most important considerations for the Fed to decide on the quantum and timing of rate hikes.
The full story
Most of these indicators are published monthly, while others are published weekly and quarterly. While these indicators correlate strongly with each other, they’re subject to divergences and short-term statistical noise. So the best approach to get a fuller picture of an overall economy is to look at these indicators as a whole rather than just one or a few. These indicators point toward the direction of the price of gold and gold-backed exchange-traded funds (or ETFs) such as the Standard & Poors depositary receipt (or SPDR) Gold Trust (GLD). They also indicate share prices for companies such as Goldcorp Inc. (GG), Barrick Gold Corporation (ABX), Newmont Mining Corporation (NEM), Kinross Gold Corporation (KGC), and ETFs such as the Gold Miners Index (GDX).
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