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Gold to Post 8% Quarterly Rise Thanks to Political Uncertainty

March 31, 2017 at 15:54 by Andrew Moran

Gold will have experienced its best quarter in a year as the yellow metal has advanced amid political uncertainty, a weakening US dollar, and rising inflation. Despite the quarterly increase, gold is poised to post a weekly and monthly decline.

June gold futures rose $1.00, or 0.08%, to $1,249.00 per ounce at 15:28 GMT on Friday. Gold is set to post a quarterly increase of about 8.2%. The precious metal will also report a weekly drop of 0.5%, while recording a monthly dip of 0.9%.

Silver is remaining relatively flat to end the trading week. May silver futures jumped $0.02, or 0.13%, to $18.23 an ounce. Silver will have a quarterly increase of more than 10% and a weekly boost of 2.2%. The white metal is poised for a monthly drop of 1.8%.

In the first quarter of 2017, there was significant safe haven demand for precious metals. Due to the political uncertainty over US President Donald Trump and the elections in Europe, investors wanted to protect their wealth in the form of bullion. The sliding greenback and the largest annual increase in US inflation in nearly five years also helped fuel gold’s rise.

Even with the Federal Reserve raising interest rates twice in three months, gold was able to make substantial gains. The yellow metal is usually sensitive to rising rates because it lifts the opportunity costs and sends traders into yield-bearing assets.

This comes as data from the US Commodity Futures Trading Commission (CFTC) showed that hedge funds and money managers boosted their net long positions in gold.

The market is beginning to doubt that President Trump can follow through on his pro-business and pro-growth agenda. Since he was unable to repeal the Affordable Care Act (ACA) and replace it with Trumpcare or Ryancare, investors are wondering if he can ever implement his policy proposals during his first term in the Oval Office.

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