Gold had its best week in nearly two years![1] The yellow metal dipped slightly Monday to open at $1,310.12 but quickly recovered all the lost ground and then some to close up at $1,316.96. Tuesday’s open pulled back again to $1,311.82, traded in a tight range for the day, and then slipped a bit to close at $1,310.55. After rallying in afterhours trading on Tuesday, the price of gold opened on Wednesday up at $1,315.41 and kept right on going, pausing briefly in the low $1,320s around New York’s lunchtime but then shooting up to close the day at $1,333.75. Gold prices pulled back slightly to $1,329.83 on Thursday morning and closed at $1,328.85. Afterhours trading lifted the price of gold and, by Friday’s open, the yellow metal had blasted its way to $1,341.64. The momentum didn’t stop there: the price of gold closed out the week at $1,347.33 for a gain of 2.52 percent on the previous week’s close, reported the historical price of gold chart. It was a banner week for gold!

Gold’s strong market performance was a direct result of a chaotic week in the news. The early part of the week was dominated by anticipation of the Fed’s first meeting under new chair Jerome Powell on Wednesday. As expected, the Fed raised the target fed funds rate a quarter point to 1.50-1.75 percent and signaled two more rate hikes in 2018.[2] Dollar bulls had been looking for indications that the Fed would be more hawkish on raising rates, but their hopes and the dollar crashed, sparking Wednesday’s rally in the precious metals complex.[3]

The dollar was not helped by growing fears of a trade war with China, as news broke of plans by the Trump administration to impose about $50 billion of tariffs on Chinese goods, a number that was chosen in response to an administration estimate of the damage caused to U.S. companies from intellectual-property violations by Chinese companies.[4] Not surprisingly, China responded with $3 billion of tariffs on imports from the U.S., reigniting fears of a recession and sending U.S. equities tumbling.[5] Investors responded with a flight to quality, and gold took off as a result.