RPT-COLUMN-Gold rally is fuelled by Trump’s tweets, but that’s not enough – by Clyde Russell (Reuters U.S. – August 14, 201)


LAUNCESTON, Australia, Aug 14 (Reuters) – Gold’s rally in recent weeks may be its first boosted by Twitter, but for the gains to sustain it will likely take more than just the ramping up of global geopolitical tensions amid bellicose tweets from U.S. President Donald Trump.

Spot gold has jumped 7 percent from its recent intra-day low on July 10 to close at $1,288.81 an ounce on Aug. 11, it’s highest in two months. The precious metal is up 12 percent since the end of last year, and while there have been other factors behind the gains, the froth in the rally is almost certainly down to its appeal as a safe haven in times of heightened political risk.

Trump’s use of the social media site Twitter to threaten “fire and fury” against North Korea certainly raised the tensions around the isolated dictatorship’s pursuit of nuclear weapons capable of reaching the continental United States.

The U.S. President later doubled down on his tweet, saying perhaps it didn’t go far enough, raising fears that Trump would go as far to consider a pre-emptive strike on North Korea, a move that could escalate into retaliatory attacks on neighbours and U.S. allies South Korea and Japan.

The geopolitical tensions stoked by Trump are grist to the mill for gold, but it’s also likely the case that a sustainable rally for the yellow metal can’t be built on the threat of conflict alone. At some point the conflict either becomes real, or the tensions start to ease as calmer heads make their presence felt on all sides of the dispute.

For the rest of this column: https://www.reuters.com/article/column-russell-gold-idUSL4N1L02AZ