Gold has been an incredibly interesting commodity to watch as of late. While the year 2017 hasn’t been a great year for the commodity thus far, the tides may be turning. In fact, last week, gold saw it’s largest weekly gain in 5 weeks. Ultimately political turmoil in the United States was the cause of the gains. Today, we’ll talk about what happened last week, why it led to gains for gold, and what traders should be watching for ahead.
US Political Turmoil Sends Gold On A Strong Week
As mentioned above, last week proved to be an overwhelmingly strong one for the price of gold. In fact, it was the strongest week the commodity has seen in more than a month. Ultimately, the gains in the commodity had to do with political turmoil in the largest economic region in the world, the United States.
Once again, market movement all boils down to President Donald Trump. You see, last week a political scandal involving the President was ultimately the cause for turmoil in the market and gains in safe haven investments, including gold.
It started with the firing of FBI director, James Comey. During his tenure as the director of the Federal Bureau of Investigations, Comey oversaw an investigation into General Michael Flynn and his potential collaboration with the Russian government. However, as the FBI director, that’s not the only thing Comey took notes on. In fact, he was particularly interested in President Trump and his potential meddling with a Federal investigation.
During his investigation into Michael Flynn, Comey started to take notes of statements that were made to him by President Donald Trump, who has always had a positive opinion of Flynn. Unfortunately for Trump, when Comey was fired, his colleagues found some damning notes when going through documents Comey was in control over.
In particular, Comey took notes that suggested that President Trump was working to stop or interfere with the investigation into Flynn. In fact, according to the notes, Trump told Comey “I hope you can let this go” in relation to the Flynn investigation.
While this may not seem like a big deal from the outside looking in, it really is. At the end of the day, the President has no reason to interfere with FBI investigations. If that was indeed what he was doing, President Trump may have crossed the line. In fact, on this news, various political figures have been pushing for his impeachment.
What This Has To Do With The Price Of Gold
At first glance, it may seem as though a political scandal involving President Trump has little to do with the price of gold. However, that couldn’t be further from the case. At the end of the day, this is a big story for all in the gold industry.
You see, President Trump is highly regarded as a positive figure for the United States market. In fact, the market rallied in what became known as the Trump Rally as he took the office. However, with a risk of impeachment here, the market took a bit of a dive, as too did the USD. After all, all of the positive changes Trump plans on making can’t happen if he is kicked out of the White House.
As a result, safe haven demand skyrocketed last week. So, investor appetite for risk fell, leading to the sale of stocks and the purchase of various safe haven investments, the most popular of which is gold. As the law of supply and demand stipulates, when demand for gold climbed as a result of political concerns, the price of the commodity followed.
What Traders Should Be Watching For Ahead
Moving forward, traders should be keeping a close eye on gold as the commodity is likely to present several potentially profitable opportunities. If you’d like to turn these opportunities into profit, there are two things you’ll need to do. First and foremost, keep a close eye on the news. Secondly, keep in mind that gold is a very popular safe haven investment. So, bad news for the market is ultimately good news for gold.
With that said, continue to watch the Trump story as it plays out. Anything associated with Trump’s moves as President of the United States and the scandal at hand will likely cause movement. Also, keep a close eye on economic conditions in the United States and around the world. As conditions seemingly fade, we could see a good boost for gold ahead.