Uncertainty and gold
Gold is used as a haven asset during rising times of uncertainty in the market. The political and financial unrest in the market boosts the demand for precious metals.
Donald Trump’s presidency so far has cast a shadow over his ability to stand by his campaign promises. The failure of the health care bill added to the market risk and also put a bounce in gold.
The revival of precious metals also gave a boost to mining-based stocks such as the VanEck Vectors Junior Gold Miners ETF (GDXJ) and the Sprott Gold Miners ETF (SGDM). These two funds have risen 2.4% and 5.0%, respectively, year-to-date.
Dual impact on gold
In the next part of this series, we’ll look at the relationship between gold and the US dollar.