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Trump, UK and the Middle East drive uncertainty

by Mark O’Byrne, Gold Core:

  • Gold hits five-week high
  • Reaches $1,273.74/oz, highest since April 25th
  • Sterling recovers after UK polls point towards a hung Parliament
  • Expected Fed-tightening capped gains
  • 90-dead in Kabul, further signs of increasing tension in Middle East
  • Trump expected to pull out of Paris Accord and Trump’s anti-Iran axis already feuding
  • Yesterday gold hit $1,273.74/oz, a level not seen for five weeks. Analysts point to some safe-haven demand for the yellow metal on account of the geopolitical tensions, upcoming UK elections and tomorrow’s non-farm payroll data.

    We suggest investors look beyond data releases and political peacocking, and instead look at what the greater picture shows which is uncertainty on all fronts.

    All about the Federal Reserve

    Amongst mainstream financial analysts, all eyes appear to be on the expected Federal Reserve rate hikes. Thomson Reuters data shows traders see an 87% chance of a 25-basis-point hike at the next Federal Reserve meeting, this month.

    Softer economic data of late, may mean that the Janet Yellen and her team might not be so keen to ramp up rates this month. Investigations into Russia’s alleged involvement in the 2016 U.S. election and possible collusion with Trump’s campaign also have clouded the prospect of a rate hike next month. The plan was for two further rate hikes this year in order to tighten the central bank’s balance sheet.

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