Gold gained almost 2.1% last week after news of possible impropriety rocked the U.S. Presidency. There were reports that Donald Trump might have asked FBI director James Comey to end the ongoing investigation into former national security adviser Michael Flynn. There are also allegations that Trump might have leaked sensitive national intelligence information to Russia.
Investors were quick to read the political unrest in Washington as an indicator of potential volatility and there was an increased appetite to drive gold prices up. News headlines breaking suggest that the bullish case for the yellow metal might be getting stronger. This piece provides analyst insight into where the yellow metal might be headed in the short term.
Terror attack rocks Manchester, England
On Monday May 22, there was a bombing at the 21,000-seat Manchester Arena, Manchester, England. The attack currently has a dead toll of 22 people, 59 people are in the hospital, and many other were wounded. Monday’s attack marked the biggest terror assault on Britain since 2005 and brings on the stark reality that no one is really safe in the face of terror attacks. A 17-old Manchester resident, Thomas Coull told the NY Times that “we’ve been watching this kind of attack happen in Paris… We didn’t expect it to happen on our doorstep, literally.” Of course, UK is treating the attack as an act of terror and ISIS has claimed responsibility.
Here’s what analysts think about gold in light of recent headlines
Analysts have weighed in on the prospects of gold with fundamental analysis of the yellow metal. Analysts mostly agree that the yellow metal is poised for a breakout even though gains appear to be muted.
INTL FCStone analyst Edward Meir thinks Gold is yet to respond to the Manchester terror attacks and that the yellow metal will rise when global politics heat up in relation to the attack. “right now, precious metals prices are relatively quiet, this despite tragic news coming out of Manchester, England… We suspect that gold will respond more forcefully going into Tuesday’s session as geopolitical tensions start to rise again,” says Meir.
Interestingly, David Becker, an analyst at iFOREX noted that news on U.S. interest rates will have bigger influence on gold prices, stating “gold is still struggling to breakout above the $1,245 – $1,265 range and the market might be hesitant to break the range until we know how the Federal Reserve acts.”
Sam Laughlin, senior precious metals trader at MKS observes that events in Washington will continue to drive bullish tailwinds for gold. Laughlin noted, “Headlines out of Washington are likely to provide continued support for the metal.”
Jeffrey Halley, a senior market analyst at OANDA brings another perspective to the gold discourse. Halley notes that volatility in crude oil could cause investors to seek stability in the yellow metal. “Nervousness ahead of Thursday’s OPEC meeting should see traders continue to hedge risk by buying gold on dips over the next few days,” said the analyst.