Gold gets a Trump bump

Gold received a fillip as Donald Trump and Kim Jong-un hurled threats at each other last week. But there are other bullish factors underpinning the precious metal.

Andrew Van Sickle
By
published
in Features

Gold is seen as a safe haven that moves inversely to risky assets such as stocks. So it's no wonder it got a fillip as Donald Trump and Kim Jong-un hurled threats at each other last week. But there are other bullish factors underpinning gold, which could bolster the price even if tension on the Korean peninsula subsides.

One of them, as the Tempus column points out in The Times, is the traditional inverse correlation between gold and the dollar. The latter has slipped recently because the repeatedly trumpeted fiscal stimulus from the Trump administration has not been forthcoming, while the latest data imply a "fairly benign" inflation outlook. That makes higher interest rates, which would increase the yield on US assets, less likely, weakening the greenback and making gold's lack of yield less of a problem.

Seasonal demand from Asia is on the rise too, and hedge funds, which are light on gold at present, are starting to nibble at it. Finally, demand from first-time buyers at one City dealer was up 76% last week, says Tempus, so it seems retail investors are getting interested too.

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Andrew Van Sickle
Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.

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