Gold Prices Rise on the Back of Political Gaffes
The term “Trump Bump” is gaining a whole new meaning as U.S. President Donald Trump becomes the target of increasing scrutiny, with the political fallout helping to power gold prices to a two-week high.
Gold traded at $1,256 an ounce on Wednesday.
When Donald Trump first took office, many economists expected a booming economy to follow as taxes were to be reduced and a seemingly more business-friendly administration was now in power. As a result, gold prices tumbled going into 2017.
That trend, however, has changed. The precious metal has been on a steady rise since its low point in mid-December 2016, as the Trump administration—while generally promising strong growth in the economy with low volatility—has been mired in political drama since the first day of Trump’s inauguration.
When political tumult hits, especially in the U.S., the yellow metal is often the beneficiary as investors seek a safe-haven asset to help manage the risk that political trouble could spill over into the market.
The commodity has traded higher this week as tensions increase within the U.S., as Trump is now subject to two separate accusations that could be damaging to his presidency.
The first is that he fired FBI Director James Comey allegedly because Comey refused to back off from an investigation into former National Security Advisor Michael Flynn, who was dismissed by Trump when it was revealed that he had lied to Vice President Mike Pence about meeting with Russian officials.
The second alleged offence is that Trump revealed “code-word, top secret” (one of the highest designations that intelligence can receive in the U.S.) information to Russian officials, which could compromise the source of that intel.
Rep. Al Green (D-Texas) even went as far as to openly call for Trump’s impeachment.
While the furor over Trump’s alleged corruption and ineptitude continue to boil, gold prices will be pushed higher on the back of the rising tensions in the U.S. political system.