gold price increase

Gold Prices Reach Peak – Will It Stay?

As 2017 kicked off, gold was thought to be an uncertain investment. However, with unclear political and economic changes on the horizon, investors are starting to stay on the safe side by turning to “safe haven” investments like gold. At the close of Wednesday, Jan. 11, 2017, gold was at a six-week high, indicating that investors are finding value in precious metals more than before.

Spot prices for gold were up 0.1 percent an ounce and gold futures in the United States gained 0.3 percent per ounce. This could be the aftermath of heated rhetoric coming from president-elect Trump as well as allegations from his adversaries in the House.

Unsavory Allegations About Trump May Be Released by Russia

In the past several days, there have been unsubstantiated reports circulating that Russia has condemning personal and financial information about Trump. These reports suggest collusion or blackmail, although the details are still unclear. This came as an appendix to a report regarding Russia’s interference in the recent U.S. presidential election. With these allegations going around, the market is sure to react. Many investors will have immediate, emotional responses to political tensions as they fear it will trickle down to have negative effects on the economy.

Potential Volatility

This week’s upcoming events may cause more volatility in gold spot and futures prices. Federal Reserve Chair Janet Yellen is scheduled to appear in a town hall meeting tomorrow where she may provide insight into the future of U.S. prime rate changes. The webcast with educators will include a question and answer portion which could bring up the topic of interest rates. As gold normally has an inverse relationship with interest rates, gold investors follow even the slightest implication of a rate hike.

President-elect Trump will also hold a press conference today and might provide more clarity into his stance on intelligence regarding Russia’s interference with the U.S. presidential election as well as the two-page document suggesting that Russians have sensitive information about his personal and financial history. It is possible that more solid evidence in either direction for these allegations may calm the markets.

Global Impacts

The future of gold also relies on the outcomes of other global activities. From elections in France in April, the U.K.’s exit from the European Union and the new regulations on gold ownership in India, gold is constantly being pushed and pulled in different directions.

So, will gold continue to rise? We may have a better answer at the end of the week. With the future of interest rates in play along with political uncertainty, the market outlook for gold could continue to gain traction if investors see the need for safe haven investments.

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