The end of 2014 saw the first resurgence in the price of gold in a long time and that trend continued into the new year. It had gold investors smiling again for the first time in a long time. But what happened next was totally unexpected. The USA made huge strides in 2014 in getting closer to energy independence and the world’s oil market collapsed. The turnaround of the dollar haltedthe gold surge in its tracks.
The dollar found itself at an 11 year high against many major currencies as a result of many new jobs being created in the USA and the non-farm payroll report being very positive. Spot Gold was around $1,170.95 an ounce which represented about a 3% loss on the year.
So what may happen next? It looks like the Federal Reserve of the USA may be forced to raise interest rates for the first time in a while.Higher interests rates combined with a strong dollar have typically decreased demand for precious metals such as gold in the past, which should drive their price of gold even lower.
One of the things gold investors have in their favor is the debt crisis in Greece. The uncertainty surrounding Greece’s financial crisis is providing a much needed push back for gold against the dollar.