Gold has climbed to a 3-month high. The spot price for gold was quoted at $1,250.05 during Asian Morning Trade Hours (24th February 2017), which means that the precious metal has succeeded to touch its target of $1249.94. As I write, the price in GBP is back above £1,000.
In today’s post, we briefly explore why gold is experiencing a bullish boost.
The timings for Trump's implementation for his fiscal policies remain uncertain. This has further diminished prospects of a rate-hike at the Federal Reserve's (FED) upcoming meetin this March. Again, the lowered chance of a rate-hike could have helped gold to reach its higher price point this morning.
US Dollar Weakens
Overnight, reports that President Trump is considering delaying a call for the US Congress to pass an infrastructure bill until 2018, has potentially promoted the bullish demand for gold. As there is now an alleged delay, this could prompt the sell-off in infrastructure stocks, which has weakened the dollar. With a weaker currency, the appeal of investing in gold could increase.
US Tax Cuts
Following US Treasury Secretary Mnuchin’s comments regarding a delay until around August 2017, for the highly-sought tax reform package, the yellow metal was given the ‘green light’, and gold prices were pushed higher.
Apparently, Mr Mnuchin did not give many details regarding the tax reform package due in August. As such, Wall Street struggled, and the dollar gradually declined. President Trump has reportedly promised a “phenomenonal” tax reform, but the delay in its delivery has seemingly caused investors to air on the side of caution and turn to safe-haven assets in the meantime. It has been quoted that, “the FOMC members believe the US economy is continuing to improve, but ‘Trumpeconomics’ could be making the outlook more uncertain”.
As always, times of uncertainty can act as a strong influence for investors, who are more likely during periods of uncertainty to turns their investments towards gold bullion.
The current situation in the US appears to be giving gold a current increase in price. The current US situation, teamed with looming European elections, Brexit negations and the continuing Greek debt crisis, are all looking to have played a significant role in Gold’s recent high.
Is this current bullish trend set to continue? Could gold hit its next target of £1270.00 in the upcoming period?
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.