Gold receives a double boost

25 May, 2018

The gold price has received a significant boost over the past few trading sessions on the back of economic and Geo political developments which may be the trigger for the precious metal to reverse its recent downtrend.

On Wednesday we witnessed the latest board meeting from the US Federal reserve where they reiterated that the market should expect a rate hike next month but the overall tone of the speech was dovish which threw into question the number of Rate hikes the fed might deliver after this one.

As a result, the Gold price rocketed up through the $1.300 mark.

“While another rate hike at the Fed’s next meeting in mid-June seems certain, the Fed minutes sounded more cautious about what would happen next,” said Carsten Fritsch, commodities analyst at Commerzbank,

Yesterday’s move by US President Donald Trump to cancel his planned summit with North Korean President Kim Jung-Un came as a complete surprise to the market and throws into doubt the sincerity of the later to give up the country’s nuclear weapons, which left investors snapping up gold as a safe haven.

The planned meeting between the 2 leaders has been one of the main reasons gold has tumbled in recent months, as it was thought that Trump could pull of a miracle by forcing North Korea to give up their nuclear weapons which would have brought peace and stability to the region, something not seen for many decades.

Last year Bridgewater Associates founder Ray Dalio predicted a scenario like this, and it remains to be seen whether the cancellation of the summit is just a game or the start of something more serious which will be a huge plus for gold.

"Two confrontational, nationalistic, and militaristic leaders playing chicken with each other, while the world is watching to see which one will be caught bluffing, or if there will be a hellacious war," Mr Dalio said.

 "We can also say that if  things go badly, it would seem that gold more than other safe haven assets like the dollar, yen, and treasuries would benefit." He added.

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