Gold hit a high over $1,227 the other day, and touched $1,244 today.
Analysts everywhere are noting that dollar strength, combined with political and economic upheaval is pushing gold prices higher. Lukman Otunuga, an FXTM research analyst, said:
“A vulnerable dollar, coupled with the persistent Trump uncertainties, has bolstered gold’s safe-haven allure.”
One particular recent news item seemed to be causing particular perplexity in the market today, because no one had any idea that friction might develop between the United States and Australia, one of the country’s longest and staunchest allies. So the revelation that President Trump had shared a very derogatory phone call with Australia’s Prime Minister, Malcom Turnbull, came as quite a nasty shock.
While the market was not particularly happy to see open discord between the United States and Mexico, or China, it was not unexpected. However, the thought of losing the one country who had supported the U.S. in some of its most unpopular initiatives triggered unpleasant visions of a country having to fight all of its battles alone.
Of course, a nervous market is where gold thrives best. As senior analyst from Kitco.com, Jim Wyckoff, noted:
“The uncertainty regarding the new U.S. president and his administration are being blamed by some for jittery world stock markets the past couple of weeks. Such has benefited the safe-haven gold market.”
And that’s how gold prices got to their highest point since the middle of November today. Given that the root cause of all of this uncertainty is less than two weeks into a 4 year term, one can only wonder at what the limits of potential demand for safe haven investments could possibly be.
Given recent events, it looks like we are all about to find out.