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Gold rally to endure until the end of 2016

The gold rally will last, thanks to the uncertainties brought by the recent US presidential elections and the Federal Reserves possible rate hike.

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Gold prices almost reached its four-week high during European hours on Monday, according to Investing.com. The precious metal held strong amid the Federal Reserve’s policy meeting early this month and the upset win of Donald Trump in the U.S. presidential elections

On the Comex division of the New York Mercantile Exchange, December gold delivery gained 0.35 percent, to $1,277.55 a troy ounce on the last day of October. Reuters reported that spot gold climbed 0.13 percent at $1,278.99 per ounce by early morning of November 1. U.S. gold futures for December delivery was up 0.52 percent to $1,279.70.

The central bank did not raise interest rates at the end of its two-day policy meeting on November 2. The Fed has not yet released a statement that would enlighten investors if the December rate hike is more probable.

The precious metal reached $1,285.40, its highest since the start of the month, last October 28. This came after Comey revealed that the FBI would review more emails possible related to Hillary Clinton’s private email server. Then, worries and doubts were renewed amid a shocking election result.

Ron William, Founder and Principal Market Strategist of RW Market Advisory believes gold could reach as high as  $1,500 per ounce since the “current price point” gives space for upside. 

“Gold has already unwound from its overbought conditions. We had very crowded positions at the recent high—it’s looking like it’s ticking up again on the back of Friday’s uncertainty and now gold is pushing up, I suspect that will continue technically until the 1,500 mark,” he predicts.

“Traditionally yes, the inverse correlation has always been there. But there are exceptions and I think this is when it depends on the timing of the move, but also the cause. In this case, it will be more of a safe haven flow argument, the U.S. dollar in particular, given what might happen around the election cycle,” he told CNBC.

Gold’s positive outlook push miners higher

Gold futures rose 20 percent so far this year. It peaked in mid-July and tumbled notably at the beginning of October. The ups and downs of the precious metal were determined by various factors. These include Brexit, Fed rate hikes becoming more probable, Bank of Japan disappointments and U.S. economic data releases exceeding expectations.

Now on the upswing, political uncertainties push the gold rally further. Companies are expected to maintain current output levels. Smaller explorers and developers, no longer squeezed, can explore new mines. For instance, Mineral Mountain Mining & Milling Company (OTC: MMMM) is currently putting its efforts on its Iditarod Gold Project in Alaska, just 35 miles north of the giant Donlin Project, owned by NovaGold and Barrick . MMMM completed staking 36 additional claims at the Iditarod Project last May 2016.

gold rally

Gold rally will endure and gold companies continue to boost their efforts.  (Source)

The company also plans a Summer 2017 Program. This is where it will build a camp on the airstrip and run a six-week program of claim staking, soil and rock sampling, and geologic mapping. It will begin by gathering and evaluating data and will also work on follow-up geochemical, geophysical and mapping program prior to any drilling.

Depending on the results of the geochemical and other work, MMMM will design and execute follow-on drill programs to continue to expand the resource. The estimated budgets for the first and second year are $750,000 and $2,000,000, respectively. Due to the increased interest in gold, the Company may attempt to due to an initial drill program in late summer 2017. This would push the first year budget to closer to $2,000,000.

Gold rally amid U.S. political climate

Meanwhile, Bloomberg also reported that the gold rally will last, thanks to the uncertainties brought about by U.S. presidential election. The Bank of America Merrill together with Lynch DBS Group Holdings Ltd. stated that the U.S. election is a factor that could push gold toward $1,500. According to Francisco Blanch, Bank of America Merrill Lynch commodities research head, backing for gold will continue to rise. He attributes the enduring gold rally to intensifying political debates in the U.S.

“The overall trend is up. It’s a longer-term trend heading upward because of what’s happening with the global economies around the world, it’s positive for gold,” Northern Star Resources managing director Bill Beament told the news site. 

Northern Star rose 92 percent as of this year, indicating that the revival in gold has increased miners’ stock prices. St Barbara Ltd., a Melbourne-based mining firm, has more than doubled so far this year. On the other hand, Australia’s biggest producer Newcrest Mining Ltd. hiked 87 percent.

Michael Jermaine Cards has made a second home in Singapore for the past 15 years. As a business executive and a financial journalist, he has seen first hand the spectacular rise of Asia’s most prosperous country, especially in the IT sector. Today he still gets a front seat at the latest market developments, stock movements, and IT innovations. He keeps close to the Western fintech sphere through his contacts in his native New York. A family man with one son, he does business consulting in parallel to his writing.

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