Gold advanced on Tuesday after United States President Donald Trump’s latest comments on the Middle East war drove down oil prices and eased inflationary concerns.
Spot gold gained as much as 1.8% to about $5,240 (C$7,116) an ounce, while U.S. gold futures rose even more at 2.7%. Silver, meanwhile, climbed 2% toward the $90-per-oz. level.
“Signals from Trump at a press conference that the conflict could be over soon, along with a report that the G7 was discussing a strategic release, has sent oil prices into reverse, the U.S. dollar lower, and allowed equities and metals prices to rebound,” BMO Capital Markets commodities analysts said in a note on Tuesday.
“That said, it’s fair to say there is still no clear off-ramp in sight, shipping through the Strait of Hormuz has not resumed, and the energy complex remains substantially elevated versus prior to the conflict.”
Oil prices, which have jumped over 30% since the Iran war started, tumbled after Trump’s remarks. This helped to ease investor concerns of high inflation that could prevent the U.S. Federal Reserve from cutting interest rates, a move that would have benefited non-yielding assets like gold.
Elevated but falling oil prices mean that inflation won’t be high enough to prevent the Fed from cutting rates this year, Bart Melek, global head of commodity strategy at TD Securities, told Reuters.
The debasement trade — the investment strategy of buying assets that benefit when governments weaken the value of their currencies through money creation, deficits or inflation — is helping gold again, Melek said.
While trading has been choppy and upward momentum has stalled after its crash from record highs in late January, the yellow metal has still gained around 20% this year.
Be the first to comment on "Gold price up as Trump remarks calm inflation fears"