Stocks and U.S. Treasury bond yields tumbled as investors moved cash into safe-haven gold amid a global market selloff.
Gold moved higher on very heavy volume yesterday and is now 1.5% higher for the week. Over one billion dollars of gold futures were bought in late afternoon trade yesterday contributing to gold’s fifth day of gains, its best run since April.
Gold’s gains may have been due to “memo gate” and allegations that President Donald Trump sought to shut down a federal investigation linked to his former National Security Adviser Michael Flynn.
Gold prices rose more than $6 an ounce in early London trading today to change hands at $1,247 per ounce, the highest level since May 3.
Concerns about political turmoil in the U.S. and poor U.S. housing data heightened risk aversion which is leading to dollar weakness.
The weaker than expected housing data added to recent negative economic data that is raising doubts over how many times the Federal Reserve will be able to raise interest rates this year.
The dollar traded at the lowest levels since the November elections against a basket of other fiat currencies after it was reported that President Trump asked former FBI Director James Comey to drop his probe into Flynn. Flynn was forced to resign on Feb. 13 amid questions over his contact with the Russian ambassador to the United States and discussions of U.S. sanctions.
The political mess in the U.S. is finally impacting U.S. and global markets and ‘Trumpquake’ should lead to a new bout of risk aversion resulting in a reversal of recent trends and gold prices eking out gains again.
The SPDR Gold Trust ETF (NYSE:GLD) rose $1.21 (+1.03%) in premarket trading Wednesday. Year-to-date, GLD has gained 7.34%, versus a 7.40% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of GoldCore.