The gold price gained more than 3 percent in the third quarter of the year, even though September was one of its worst months of the year.
A weaker US dollar and geopolitical tensions between the US and North Korea supported gold over the quarter. Gains were offset by the US Federal Reserve’s hawkish tone — at its last meeting, the Fed pointed to another interest rate hike later this year and three more in 2018.
Despite those factors, many market watchers believe the gold price will continue to rise in 2017, supported by further geopolitical tensions and a softer dollar. Read on for an overview of the factors that impacted the gold market in Q3, plus a look at what investors should watch out for in the last few months of the year.
Gold price update: Q3 overview
In the third quarter, the gold price rose 3.08 percent, boosting its gains for the year to almost 11 percent. As the chart below from Kitco shows, the metal trended upward during the period, reaching its highest point of the year early in September.
Gold hit its lowest point of the quarter on July 7, when it fell to $1,212.20 per ounce. Investors awaited more signals from the Fed, while other central banks hinted at tighter monetary policy going forward.
The metal rebounded from its lowest point and broke the $1,300 mark in August, as geopolitical tensions between North Korea and the US escalated rapidly. Gold reached its quarterly peak on September 7, when it touched a one-year high of $1,348.60.
Gold price update: Factors to watch
As the last quarter of the year begins, investors interested in the gold market should pay attention to a number of factors that could have a short-term impact on the precious metal’s price.
Most analysts agree that geopolitical developments will continue to be a key driver for the gold price for the rest of the year.
“I don’t think the North Korea story is going to go away anytime soon. I think that is a very real and dangerous issue that will be resolved at some point this year,” said Gold Newsletter Editor Brien Lundin. “Any resolution that doesn’t involve China is terrible to contemplate, and will have tremendous implications not only for the markets, but for the welfare of many thousands of individuals,” he added.
Similarly, Nitesh Shah, commodities strategist at ETF Securities, said that tensions between North Korea and US will be one of the key catalysts for gold in the next few months.
Other geopolitical developments that could create uncertainty in the market include the outcome of the recent Kurdistan referendum and the possibility of further US sanctions in Venezuela and Iran. The formation of a government in Germany could also lead to uncertainty, but Shah believes that won’t have a major impact on the yellow metal.
Meanwhile, Resource Maven Gwen Preston commented that gold’s fundamentals are very strong because there is “incredible uncertainty around the world, starting with [US President] Donald Trump and going to North Korea. Then continuing with all kinds of economic arguments about the strength of the US economy and the dollar.”
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