Trump Causes Double-Edged Sword for Gold

Cassie Bastien

5/22/2017 12:14:43 PM

Daily Gold & Silver Market Report – 05/22/2017

Although Gold prices may continue to rise as investors look to that safe-haven asset, Michael Cuggino, president and portfolio manager at a San Francisco-based fund, says they could drop if the U.S. political turmoil curbs inflation risks on disappointing growth. Ranjeetha Pakiam with Bloomberg reports “allegations that [President Donald] Trump asked FBI Director James Comey in February to end his investigation of former National Security Adviser Michael Flynn and the president may have inadvertently passed sensitive intelligence to Russian officials” have caused spot Gold prices to climb. Furthermore, there are concerns the administration will not be able to implement its economic plans. Cuggino said, “If rates do continue to rise gradually, if monetary velocity is controlled, increasing but controlled, and you have growth, gradually rising rates, and gradual inflation, I’d expect to see Gold to continue to go up.” Australia & New Zealand Banking Group Ltd. Analyst Daniel Hynes said in a report Friday that Gold prices have a strong chance of breaking $1,300 per ounce this year if the U.S. political situation worsens and higher interest rates won’t be a hindrance.

• Spot Gold climbed to the highest level in more than two weeks on Thursday, reaching $1,265.08 an ounce, and posted its best weekly gain in a month through Friday (Bloomberg.com).

Silver Prices Extend Gains Toward $17

As demand for risk-off grew after a wild week in financial markets, Silver prices began to rise early Monday morning. Sam Bourgi with Economic Calendar said Silver “made an attempt at that coveted level last Wednesday before succumbing to bearish pressure. The bear camps have been vocal about the gray metal’s failure to extend gains north of $17 [per ounce].” He adds that a weaker U.S. dollar has elevated demand for Precious Metals.

• The U.S. dollar index was down 0.2 percent at 96.95 Monday morning, dropping in six of the past eight sessions (EconomicCalendar.com).

How Mining Stocks Are Correlated to Precious Metals

Precious Metal prices took a hit in early May as investors prepared for another interest rate hike by the Federal Reserve. Furthermore, Meera Shawn with Market Realist says mining companies such as Global X Silver Miners and iShares MSCI Global Gold Min saw a considerable rise in prices, rising 2.3 percent and 0.92 percent, respectively, over the past five trading days. Shawn said, “Metal investors should study upward and downward trends because price change predictability can be impacted by Precious Metal prices. ... [However,] rising prices don’t necessarily mean an increasing correlation.”

At 1:14 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,263.60 Up $7.20
• Silver, $17.27 Up $0.37
• Platinum, $952.10 Up $9.40
• Palladium, $765.50 Up $0.80

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