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Gold Futures Target $1,250 as Safe Haven Demand Surges

February 8, 2017 at 15:34 by Andrew Moran

Gold prices have hit a three-month high as the yellow metal targets $1,250. Due to the political risks unfolding in both the US and Europe, traders are returning to gold as a safe haven investment. Gold futures are trading in positive territory for the fifth consecutive trading day.

April gold futures climbed $9.80, or 0.79%, to $1,245.90 per ounce at 15:06 GMT on Wednesday. Gold prices are trading at their highest levels since November 10, and are now on a path of hitting $1,250, an important threshold for the precious metal to reach.

Silver is also joining in on the rally. March silver futures rose $0.09, or 0.56%, to $17.85 an ounce. Silver is trading at its highest level in 12 weeks and is on the cusp of recording another weekly gain for 2017.

The precious metals are making the gains due to all of the domestic political turmoil and international strife presently transpiring. Gold has advanced more than 7% year-to-date.

Investors are worried about US President Donald Trump‘s policies and what negative consequences they could have on economic, trade, and foreign policy. His calls for a weaker dollar have also impacted the greenback as it has shed 0.2%, adding to the 2% decline year-to-date.

Meanwhile, many traders are fearful of a presidential victory for French National Front leader Marine Le Pen. The presidential candidate has pledged to take France out of the euro zone, dump the euro, and hold a referendum on exiting the European Union (EU). The polls suggest that Le Pen is the current front runner in the race.

The Netherlands and Germany are also holding elections this year, and the populist sentiment remains strong there, too.

It is still unclear as to when the Federal Reserve will raise interest rates. Experts note that when the January consumer price index (CPI) is released then investors will get a better idea as to when the US central bank will pull the trigger on the next rate hike.

All of this uncertainty is driving demand for gold. The latest data from the US Commodity Futures Trading Commission (CFTC) show that there has been an increase in long positions for the yellow metal and a decrease in shorts.

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