Gold boosted by cracks in market confidence says VanEck

Feb 28th, 2017 | By | Category: Commodities

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Uncertainty over the Trump administration is providing support for the gold price according to market commentary released by ETF provider, VanEck. Gold and gold stocks have had an encouraging start to the year, with the gold price and the VanEck Vectors Gold Miners UCITS ETF up 8.2% and 12.0% YTD respectively.

Controversial executive orders and anti-trade manoeuvring by the Trump administration have damaged investor confidence.

After the irrational euphoria following the November election, markets are now starting to reflect reality again, according to Joe Foster, portfolio manager and gold strategist at VanEck. “The markets are beginning to price in actual risks of a Trump presidency. As long as interest rates are still at microscopic levels and US stocks at all-time highs, gold, in our view, is an obvious investment alternative as a hedge against market uncertainty and financial risk.”

In a further lift for gold, President Trump has indicated recently that a strong US dollar is not necessarily in the best interests of the United States. The US dollar is traditionally seen as negatively correlated to the gold price. Incoming Treasury Secretary Steven Mnuchin also made comments that were interpreted as unsupportive of the dollar. In addition, controversial executive orders and anti-trade manoeuvring have damaged investor confidence and further contributed to dollar weakness.

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