Why Geopolitical Sabre-Rattling will be Good for the Gold Price

Gold hits 12-week high
USD Gold price up 4.85% in last month
Sabre-rattling from Trump administration set-to benefit gold
Iran upset and Middle East tensions could drive oil and gold prices up.
Financial Times foresees “not only currency wars but a fully fledged trade confrontation that could be disastrous for the world economy.”
Royal Mint producing 50 % more gold bullion coins and bars compared to 2016
Utah moves to hold public funds in gold
WGC report demand for gold hit four-year high in 2016
Investment demand climbed by 70% last year fuelled by geopolitical uncertainties

The Trump administration continues to sabre-rattle at global powers and threatens to disrupt the status-quo of international relations. Comments in just 24-hours by Donald Trump and his team have included attacking an Ivy League university, a nuclear power and two of the United States’ key trading partners.

We continue to look on as the unconventional tweets and announcement appear, but in the meantime watch the gold price hit 12-week highs and inflows of roughly 1.2 million ounces surge into gold ETFs, as uncertainty continues to drive investors towards safe havens.

FOMC stand-by to watch the Donald

Many market observers may have found a funny sort of comfort in seeing the statement of the FOMC meeting, this week. A funny thing to say, but given each day appears to bring a new surprise there is something reassuring that meetings and announcements from the likes of the Federal Reserve, continue as scheduled.

Unsurprisingly, and despite Janet Yellen’s warnings of a ‘nasty surprise on inflation if it was too slow with rate hikes’, the Federal Reserve held back from a further rate rise this week. The committee painted a fairly positive outlook of the economy, it was perceived to be dovish. The statement helped to ultimately push gold prices higher as the dollar fell in disappointment to no rate hike. For some this was an example of ‘The Fed that cried Wolf.’

The Fed is still expected to hike rates up at points throughout the year, but uncertainty about when and how much remains. The FOMC are waiting for further disclosure President Trump’s economic policy.

Gold was the only commodity that climbed higher (+0.9%) following the Fed announcement.

Iran on notice: be on notice to buy gold

Earlier this week Iran tested a ballistic missile and attacked a Saudi navy vessel. The Trump did not disappoint in letting the world that they were unhappy, through both Twitter and Mike Flynn.

Mike Flynn, Trump’s national security advisor stated, ““Recent Iranian actions involving a provocative ballistic missile launch and an attack against a Saudi naval vessel conducted by Iran-supported Houthi militants underscore what should have been clear to the international community all along about Iran’s destabilizing behaviour across the entire Middle East”

Flynn concluded, “As of today, we are officially putting Iran on notice.” This was followed by a Tweet confirming this position, by Trump.