Gold Shines as Safe Havens Come Back Into Fashion

 | Apr 12, 2017 | 8:31 AM EDT
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This article was written by David Yoe Williams

Gold enjoyed a very strong day Tuesday and is poised to follow it with another good day today. The catalyst for the move was geopolitical in nature, as both Syria and North Korea took center stage. Renewed tensions in these areas of the world had investors looking for safe-haven assets and "risk-off" investments.

The headline reasons for gold's rise served to highlight many of the other market concerns putting a strong bid to the gold price in recent days.

The fight over a U.S. government shutdown on April 28 has become more intense since the approval of the Neil Gorsuch for the Supreme Court. The price of gold reached all-time highs of $1900 the last time a serious shutdown was threatened, back in 2011.

Political tensions in France have also been raised, as the outlook for their presidential election has become even cloudier in recent days. The first round of that vote is set to take place on April 23, the second round on May 7.

Fed policy has also been a driver behind gold, as the central bank continues to try and thread the needle between raising rates, reducing the balance sheet and maintaining a growing economy.

Technicals also seem to have turned near-term bullish with this latest jump in the price of gold. The 200-day moving average has been successfully breached after several attempts. If gold holds above $1270 in the next few days, it should signal a short-term move higher into the $1325 range.

Gold is up over 9% this year and continues to show strength as a safe-haven asset in a global economy, led by the U.S., that is showing signs of weakening after eight years of modest but steady growth. The metal remains a hedge against a system that is increasing recognized as full of risk.

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