Political Risks Push Gold to Five-Month High on Haven Demand – by Eddie Van Der Walt and Ranjeetha Pakiam (Bloomberg News – April 12, 2017)


Concerns about rising global tensions surrounding Syria and North Korea are revitalizing demand for gold as a haven, with the metal trading near the highest since Donald Trump was elected U.S. president.

Bullion touched a five-month high Wednesday. A standoff between the U.S. and Russia after an American missile strike on Syria and Trump’s pledge to solve the North Korean “problem” with or without China have deepened concerns about political stability. There are also signs that Russia and the U.S. are increasingly at odds over Afghanistan.

The metal slumped after Trump’s election on his promises of tax cuts and more infrastructure spending, but rebounded since mid-December amid worries about the unpredictability of his presidency. While gold may extend gains in the next few weeks, better U.S. data and higher real interest rates will then push prices lower, Goldman Sachs Group Inc. said.

Trump “did it again,” David Govett, head of precious metals trading at Marex Spectron Group in London, said by email. “Just continue to hold gold as a hedge against all this uncertainty, but be very aware that if diplomats can reach agreements, the price will fall back again.”

Gold futures for June delivery gained 0.3 percent to settle at $1,278.10 an ounce at 1:39 p.m. on the Comex in New York, after touching $1,281.80, the highest for a most-active contract since Nov. 10. On Tuesday, the price closed above its 200-day moving average for the first time since November.

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