Commodity Blog

The market is beginning to doubt US President Donald Trump and his ability to push through pro-growth and pro-business policies. This is proving to be great for gold prices as the US dollar and stocks are taking significant hits to kick off the trading week.

April gold futures climbed $5.60, or 0.45%, to $1,254.10 per ounce at 16:34 GMT on Monday. The last time gold prices traded at these levels was late February. Last week, gold recorded its second consecutive weekly gain of 1.3%.

Silver is also rallying to start the trading week. May silver futures rose $0.31, or 0.76%, to $18.06 an ounce. Silver also posted a weekly gain last week of 1.3%.

Precious metals have had a great 2017 so far. Year-to-date, gold has risen about 10% and silver has gone up roughly 11%.

Gold is jumping on Monday due to the market’s fear that President Trump cannot follow through on his campaign pledges to implement business-friendly policies. The real estate billionaire mogul suffered his most serious setback of his first term last week as the Republicans ditched a healthcare reform package that was meant to replace and repeal the Affordable Care Act (ACA), otherwise colloquially known as Obamacare.

The US dollar tumbled 0.6% on Monday, trading at a four-month low. A weaker greenback is a boon for commodities like gold, silver, and copper because it makes cheaper for foreign investors to purchase.

Meanwhile, American stocks are plunging on Monday as the Dow Jones, NASDAQ, and S&P 500 are all seeing red.

With these trends at the forefront of the business headlines, investors are diving back into gold as a safe haven asset. According to new data from the US Commodity Futures Trading Commission (CFTC), hedge funds and money managers increased their net long positions in gold. This comes after two straight weeks of cuts and a Federal Reserve vowing to raise interest rates at least two more times this year.

The yellow metal is generally sensitive to rising rates as it lifts the opportunity cost and sends traders into yield-bearing assets.

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