Gold Price Outlook Hinges on Federal Reserve Meeting
On September 12, the Federal Reserve will meet for its next policy meeting. As we’ve seen recently, the anticipation of what will be said at this meeting is the number one thing driving the gold price outlook. You can expect to see the benchmark price of gold rise and remain higher after this meeting.
The market watchers are waiting for the Federal Reserve to come forward with a plan for reining in the runaway federal debt. Will they offer some kind of stimulus plan to rein in the deficit? If so, will it be enough to put some breathing room back into the economy?
A fiscal stimulus plan might be necessary, but so far they haven’t offered anything concrete. Whether or not the Federal Reserve meets their goals is debatable, as they’ve met many goals over the last two years. So, what’s the big deal in this meeting?
Looking at the silver prices, the silver price outlook hinges on where the silver price sits in the next month. I believe that silver will continue to move higher in the month ahead. But, what happens after that?
Will the dollar dip lower and weaken the dollar? Silver was a safe-haven investment in times of economic turmoil. It has held the value of the dollar and the Euro down during some of the most difficult economic times in history. Will silver hold the value?
Looking at silver prices, silver prices are very volatile. Some days it is up, and other days it is down. With the dollar at a low point in the dollar chart, it makes sense to buy silver when it is up and sell it when it is down.
Some analysts suggest that silver is now oversoldas the dollar falls lower. If silver falls further, it would be difficult to profit from it, because the dollar strength is still so low. If the dollar stays weak and silver keeps moving higher, it will have a long-term bullish effect on the price of silver.
I don’t know if silver will hold its value or move higher, but I do know that the dollar strength continues to weaken. So, you could see silver rise significantly as the dollar weakens and the Chinese become more aggressive on the silver market. The silver price outlook hinges on how the dollar falls lower.
Of course, silver also has an upside if the dollar rises further. The reason that gold is stronger than silver is because it’s a physical commodity. Silver is a virtual commodity in the world of virtual assets like e-gold and alternative currencies.
Silver’s major value comes from the demand for silver, whether for jewelry, software, etc. The price of silver could fall as gold rises, but if the price of silver falls while the price of gold keeps rising, silver would gain a lot of value. This would strengthen the silver price outlook.
The dollar strengthens during times of financial trouble and weakens as the economy gets stronger. The dollar is weaker during times of economic recovery and stronger when the economy is doing well. Thus, the dollar weakens when the economy is going down and the dollar strengthens when the economy is growing.
This seems to make sense, but it makes a lot of sense when looking at the silver price outlook. Silver is the safest asset for this time of economic uncertainty, but it would be quite a mistake to assume that silver is the same today as it was in the past.