Gold Gains As U.S. Political Fear Ignites

On Wednesday, gold traded higher amid political worries over President Donald Trump. The dollar tracked lower amid all the global problems and the Fed may hike rates, which should put pressure on any move higher that gold makes. Gold traded higher by 0.6% to $1,243.31 per ounce.

Political Problems

One of the main reasons gold traded higher was because of political worries in the United States. It was revealed that Trump had asked Comey to end a probe between the former national security adviser Michael Flynn and Russia.

Since then Comey has been removed from his position. However, the Attorney General of the United States appointed former FBI Director Robert Mueller to investigate the possible interference of the 2016 campaign by the Russians.

With the focus having to shift to all these political problems, it makes it hard for the white house to focus on other issues such as tax reforms.

Lower Dollar

On Wednesday, the dollar index was lower by 0.2% to $97.89 – hitting a near 6-month low. The last time the dollar index was near that level was around six months ago during the November election.

The dollar index reached its 14-week high of $103.82 back in January. Since then it has fallen 5.8%, despite talks about a possible rate hike. Even the USD/JPY pair suffered a trade loss. The dollar fell by 2.09% against the yen on Wednesday. That was the biggest one-day drop since July.

The dollar falling so much has allowed gold to continue its upward trend. That is because there has always been a correlation between the dollar and gold. The dollar also traded lower thanks to Eurozone economic data. Eurozone GDP for the first quarter grew by 0.5% which was in line with estimates. That shows that the Eurozone economy remains robust. The Euro currency traded higher because of that, causing the dollar to dip.

Fed Rate Hike

What may push gold lower, despite all the global issues, is a Fed rate hike. The Fed is set to host its next meeting in June. There, it will decide if it should raise interest rates in the United States.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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