Gold higher after political anxieties and weak U.S. data

Gold higher

The price of gold jumped to its highest level after poor economic data and political anxieties in the United Sates lessened the prospects of an interest rate hike this 2017. This dragged down the bond yields of the country and made their currency decline.

Homebuilding in the U.S. unexpectedly fell and it adds up the list of weak economic figures. This heightened concerns on how many times the Federal Reserves will lift interest rates this 2017. Traders are estimating in a 71 percent chance of an interest rate hike next month in accordance to CME’s FedWatch tool.

President Donald Trump is currently pressured to clarify whether he attempted to impede with a federal probe after reports that he requested former FBI chief James Comey to conclude an investigation into his ex-national security adviser Michael Flynn. This made the investors doubt if Trump can enact deregulation and tax reduction, and will further raise the demand for safe haven assets like gold.

U.S. gold futures edged higher by 22.30 to trade at $1,258.70 per ounce for its June delivery. Spot gold advanced more than 1.86 percent to finish at $1,259.40 per ounce. For the very first time since May 3, gold traded both above averages on an intraday basis.

It is already given that a weaker U.S. dollar will push the yellow metal low-priced for investors that are not in the country, while lower yields will decrease the opportunity cost of buying non-yielding bullion. Meanwhile interest rate hike will make the yields higher and could possibly strengthen the U.S. currency.

FAQs

Leave a Reply

Your email address will not be published.