U.S. Political Instability Raises Gold Prices
As political tensions mount in the United States over allegations of Russian ties to the Donald Trump administration, investors are flocking to gold in order to hedge against a potential economic fallout, raising gold prices.
While President Trump was heralded as a pro-business president, that cause for celebration has been slowed in recent weeks. Accusations levied against the administration over its dealing with the investigation into the alleged Russian influence on the election, and into Russia’s relationship with several key current and former members of Trump’s cabinet, have damaged the Greenback and have helped gold.
As the investigations continue to intensify, many have flocked to gold as a safe-haven asset to ward off potential instability in the market that could arise, should more damning information come out against the Trump administration.
Gold came in at $1,255 an ounce, just under Monday’s three-week high.
After Trump’s dismissal of former FBI Director James Comey, new information has come out claiming that Trump allegedly asked Comey to relent on the investigation into Michael Flynn’s connection to Russia.
Flynn was Trump’s first pick for national security advisor, but was forced to resign after it was revealed that he had lied to Vice President Mike Pence about meetings with Russian officials.
With a special investigation underway into the possible connections between the Trump administration and Russia, gold prices will likely see a boost if any new information comes out connecting Russia to Trump or members of his cabinet.
The political turmoil is also being felt on the market. The U.S. Federal Reserve is set to meet in mid-June, when it is likely to raise interest rates, which would have a negative effect on gold prices.
Following the political drama in the U.S., however, the market’s predicted near-100% odds of a rate hike have now been lowered to 70%. While many are convinced that the Fed will still likely raise interest rates, uncertainty within the U.S. presidency has now spilled into economic forecasts.