As gold futures rose for the second day in a row, it allowed January to post the largest monthly gain that the market has seen since June. And though there are multiple factors involved, they all seem to stem from our new president.
The dollar weakened further against 10 other currencies, for the third day in a row. This was largely due to negative global reaction to comments made by President Trump regarding currency devaluation by other countries.
Although, the dollar had already started weakening after Trump fired Acting U.S. Attorney General Sally Yates upon her refusal to allow government prosecutors to defend the recent travel ban implemented by Executive Order of the president.
The ban, itself, was the cause of major protests, which caused an enormous amount of disruption in U.S. airports and major confusion in airports around the world as to how officials were to comply with the new order.
As prominent political leaders in the U.S. and abroad began to proffer the opinion that such a ban was actually going to aid in recruitment of terrorists, disagreement became rife as to whether it would be helpful or harmful in assuring the safety of citizens around the world.
In such an atmosphere of disagreement and uncertainty, gold tends to thrive. So part of the gains are attributed to these recent events.
Stock Market Slide
After many weeks of record gains since the presidential election, even the stock market was sliding backwards, with losses bigger than anything seen in the last six weeks. As companies started realizing the ways their businesses will be affected by the travel bans, Wall Street took note.
When stocks look vulnerable, gold starts looking valuable, and investors reacted accordingly.
The Fed and Interest Rates
It had been generally understood that the latest interest rate hike by the Fed was only the first in a series. But with the latest turmoil still in progress, the general consensus is that the Fed will not want to rock the boat with any more action. Chances are, gold doesn’t have anything to fear from that directions for a while.
All in all, a really good day for gold.