Gold Prices July 2014

Gold prices fell about $3.60 per ounce the week of July 21, 2014, which equates to about 0.27%. The precious yellow metal ended the week at $1,308 per ounce, hanging on above the $1,300 mark, but is experiencing a late month slowdown following several straight weeks of gains in June and July. Let’s look at some recent strengths, weaknesses, threats, and opportunities for gold as we approach the end of the month.

Glittering Strengths
2014 is seeing a surge in overall metal buying, which is good news for gold. Investors are purchasing metals at the fastest rate since 2009. If this trend continues, it will no doubt impact (reduce) gold supply, which will in turn drive the price up. For current gold investors, this is good news, but for those who wait until later this year to buy gold, the price may be higher. Also, China’s manufacturing activity increased in July 2014, which should lead to increased earnings and a surge of gold demand from the world’s number one gold consuming country.

Seeing Weaknesses?
India continues its restrictions on gold imports and increased taxes on gold transactions. This is bad news overall for gold, as India is a significant contributor to the metal’s market. In general, the gold market saw slight declines this week, though is still having a positive year.

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Golden Opportunities!

The largest opportunity in the gold market is gold itself. The slight price decline this week means that for prospective investors, the metal is slightly less expensive to purchase now than a week ago. It is unknown how long this opportunity will continue, though there are a number of factors that point to an increase soon. These include the trends mentioned above, as well as ongoing conflicts in Russia/Ukraine, Iraq, and Israel/Gaza. Conflicts like these often impact the gold market favorably.

Threats To The Price Of Gold

The gold surplus is currently a bit higher than its demand, meaning that short term demand may be low, but that is expected to turn around in the coming weeks. Other metals and precious metals are also a threat to gold. As mentioned previously, metals in general are seeing a surge this year. Precious metals like palladium are also seeing records sales numbers this year. Silver, which often follows the same pattern as gold, is significantly less expensive to purchase, meaning more people may look at silver rather than gold.

Gold Market For The Rest of 2014 Bullish According to Many

Many gold experts are preparing for what they believe will be a gold price rally in the weeks and months ahead, according to Bloomberg. Violence between Russia and Ukraine, as well as in other parts of the world, are the driving factor behind these predictions.

During the first half of 2014, gold prices grew by about 10%. While the metal has seen some slight decline in the latter half of July, the summer has been strong overall. The decline in recent weeks has been due to an improving U.S. economy, including the lowest unemployment claims rate in eight years, and a three month consumer sentiment high. However, economic news and sentiment changes often, so many experts anticipate another growth spurt when the economic news turns negative.

The net-long position in gold amongst investors rose over 3% in July, meaning that more people are investing in gold as a long term strategy. Now is a great time to make this move, as prices recently dropped, and every penny counts, especially through the long term lens. Also, at the end of July, the Fed will announce decisions made at its recent meeting this month. If they announce continued stimulus cutbacks, as expected, gold’s price should be positively impacted.

No improvements in geopolitical conflicts have helped support a bullish gold market as well. The recent shooting of the Malaysian Airlines jet has propelled the Russia-Ukraine conflict into more dangerous territory, and the Middle East situation shows no sign of slowdown.

In other news, the country is experiencing somewhat of an agricultural slump this year. This slump, or production decrease, is good for gold, as many investors in the agricultural market will look for other opportunities, including precious metals. Net-long positions in 11 agricultural products have dipped 20% this year. Cotton prices recently finished a 12 week decline, the longest since 1959.

All of these trends and updates are positioning gold for what many believe will be a long term bullish market ahead. Given that many investors are ramping up on gold purchases, now is a great time to look at your portfolio and see how gold can help achieve your long term investment goals. Physical gold allows you to benefit from the precious metal without the influence or restrictions of purchasing stock market gold (GLD). Many options are available, from coins to bars to bullion.

Now Approaching: Gold’s Strong Season

Gold Prices Have Steadily Increased Over Time In The U.S. Since 1971

Gold, like any other investment, service, or product, experience seasonal ups and downs. These seasonal shifts help market experts predict what will happen next, and help investors make decisions about when it is or is not a good time to buy. For example, it’s no surprise that sunscreen sales increase in warmer and summer months, while hats and sweaters are sold more frequently during colder months.

We are just days away from the beginning of August, which historically is gold’s second strongest performing month. The metal sees a 2.7% increase on average during August. Following that is September, the third strongest month of the year, though not by much. September also typically sees an average increase for gold of 2.7%, though since it has one less day than August, it is ranked just behind.

Once we enter fall, gold sees a brief dip, followed by more strong months. October typically sees gold experience a slump, not surprising after the gains usually seen in August and September. Then comes November, which is gold’s strongest month of the year historically. On average, the metal sees an increase of 3.3% during November.

In short, gold’s three best months are right around the corner!

What this means is, based on historical trends, now is the best time of year to add gold into your portfolio. People who buy gold before the “high season” begins typically see significant gains in three out of the next four months. This could provide for solid short term gains if the trends hold true this year. However, we always recommend investing in gold as a long term investment. That way, you get to go through many rounds of the seasonal gains, and gold has always, throughout history, performed very well when examined over the course of a few decades.

The one caveat is that these numbers are based on what’s happened in the past. What happens in August through November of 2014 remains to be seen, and no one can tell you with total certainty what will happen. This is another reason to buy gold as a long term investment. This year may be a fluke year where the seasonality of the market varies from traditional trends, though if you hang onto the metal long enough, it will correct itself over the course of several years.

Trends and forecasts are important to any financial decision, and based on the data available, the months ahead should be a great time to own gold.