On Friday, gold prices rose above $2700 an ounce as the demand for safe havens increased.
The US president-elect Donald Trump’s uncertainty about interest rates in the US and tariffs on trade has led to an increase of prices that is near a one-month-high.
The gold bulls are largely unaware of the recent strength in the Dollar Index.
The stronger the dollar, the more expensive commodities are for buyers overseas.
The February COMEX gold contract was trading at $2.703.59 an ounce as of the writing. This is up 0.5% compared to the previous closing price.
COMEX silver futures were up as well, at $31.122 an ounce. This is a 0.4% increase from the close on Thursday.
Experts say that gold and silver are both up this week as a result of increased inflows into safe havens.
Trade jitters spur demand
The gold spot price was trading at a level that is nearly 2% above the closing prices of the previous week.
The markets were highly volatile ahead of Friday’s release of US Non-Farm Employment Change Report.
Markets will be able to get more information from the data about how the Federal Reserve intends to reduce interest rates in the next few months.
Dollar demand has been boosted by Trump’s uncertainty about tariffs.
Barbara Lambrecht said that both gold and the US dollar are “strong at the same times when they’re being looked at as safe-haven investments due to an uncertain political environment around the world,” she added.
It appears that this is the current situation, even though some of the uncertainty around the world stems from both the US and President-elect.
She added that “the inauguration of Donald Trump, on the 20th January, is unlikely to affect this in the near term. This is why gold should continue to be supported.”
Focus on Fed
Minutes from the last US Fed meeting revealed that policymakers were cautious in reducing interest rates any further.
This was due to the resilient US economy, and high inflation.
In the US, there was also relative stability in the labour market.
Gold price could be influenced by the economic data released later this Friday.
Fed officials also expressed concerns about inflationary pressures resulting from Trump’s protectionist policies and his expansionist ones.
Before his January 20 inauguration, there is likely to be a growing sense of uncertainty about his plans.
Trump’s plan is expected to lead to higher inflation which will then cause the Fed to reduce its monetary ease.
Interest rates are high, and this reduces the appeal of metals that do not yield a return such as silver or gold.
Global Gold ETFs
Gold ETFs saw a 6.8 ton outflow last year, according to the World Gold Council.
Commerzbank reports that the outflows were significantly lower than the reported 85 tons by Bloomberg because the WGC includes a greater number of ETFs.
The asset value (AUM), despite outflows, increased to $56 billion due to a sharp rise in the price of gold.
ETFs in Europe saw a net outflow of 98 tonnes last year.
Inflows have been recorded in North America, Asia and Europe.
According to WGC, 8 tons of inflows were registered in North America. In Asia the inflows were 78.4 tonnes.
What’s driving the gold price rally? This post may change as the updates unfold.
