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Gold strong as election called and dollar and FTSE dip

A jump in the pound to a five month high of $1.29 following Theresa May’s announcement of a snap general election yesterday, saw the gold price adjust to $1,283 this morning having previously hit $1,291.98 an ounce yesterday. Gold peaked in the previous session at $1,295.42, its highest since Nov. 9.

Gold’s outlook appears bullish as the call for a British general election, in order to secure a clear mandate to define Brexit, will now see France, Germany and the UK go to the polls this year.

The inherent uncertainty around elections has buoyed gold, along with recent geopolitical tensions over Syria and North Korea. Additionally there was a significant equity adjustment in the FTSE yesterday which went negative for the year as the pound rose.

Elsewhere the dollar has dipped making dollar priced gold cheaper. Saxo Bank’s head of commodity strategy, Ole Hansen, told Reuters “expectations about the dollar are up for revision, the strong dollar story is fading, Trump is talking it down and we’re seeing weakness creep into U.S. data, changing the perception of how much rates have to rise”.

However, in the same piece, Ryan McKay, associate commodities strategist for TD Securities in Toronto, said he does not expect gold prices to extend gains much above $1,300 citing the Fed’s policy to keep nudging rates.

“The Fed is still probably on course to hike two more times this year. Until something fundamentally happens to change the Fed expectations or something happens with North Korea or the likes of that, we think it’s capped at this $1,290-$1,300 resistance.”

That view is not universal: Bloomberg reported last year’s leading metals analyst as saying gold could hit $1,350 by year end following continued global tensions and political variables.

“Markets will surely remain nervous about this uncertainty,” said Intesa Sanpaolo SpA’s Danilea Corsini. “If economic data in the U.S. remains strong, then gold will regain its role as an inflation hedge.”

European elections will also provide an impetus for gold buying she added.

Link to this article: : http://www.goldmadesimplenews.com/gold/gold-strong-as-election-called-and-dollar-and-ftse-dip-13084/

Posted by on Apr 19 2017. Filed under Gold News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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