Weekly Round-Up: Gold Price Up on Political Uncertainty

Investors turned to safe-haven assets on Friday as the leaders of the world's biggest industrial nations met at the G7 summit in Italy.

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The gold price was on track to hit a four-week high on Friday (May 26) as political uncertainty about the Group of Seven summit in Italy turned investors toward safe-haven assets.

“We have had the political noise coming from Trump and the U.S. administration and there is a certain element of uncertainty in the markets in general, which is supporting gold. Equities are also down,” analyst Carsten Menke at Julius Baer in Zurich told Reuters.

Investors are closely watching the G7 meeting, where leaders from the world’s richest nations are facing difficult talks with US Donald President Trump. The upcoming UK election is also pushing investors away from riskier assets and has boosted gold’s appeal.

“At the moment it’s increasing political uncertainty that is driving the gains rather than [Federal Reserve] speculation,” Colin Cieszynski, chief market strategist at CMC Markets, said to MarketWatch.

“Between [Thursday’s] contentious NATO summit and the potential for fireworks at this weekend’s G-7 Summit, plus a tightening U.K. election race, capital has been moving back in to defensive havens like gold,” he added.

Looking ahead to next week, the focus is likely to turn back to speculation about the US Federal Reserve and interest rates. That’s because US ADP payrolls are due Thursday and nonfarm payrolls are out Friday, Cieszynski said.

As of 1:00 p.m. EST on Friday, the gold price was sitting at $1,267.26 per ounce.

Looking over to silver, the white metal was on track for a weekly gain of almost 2.5 percent on Friday, supported by the same political uncertainty as gold. As of 1:00 p.m. EST that day it was trading at $17.31 per ounce.

Platinum was up 2.8 percent for the week, at $961.24 per ounce, having achieved its biggest weekly rise since the beginning of the year. Meanwhile, palladium gained 1.8 percent to reach $779 per ounce, its first weekly gain this month.

On the base metals side, copper pulled back from the three-week high it hit on Thursday (May 25) ahead of the long weekend break. London Metal Exchange copper closed at $5,657.50 a tonne, down 1.1 percent. Prices hit their highest since May 3 on Thursday at $5,768.50.

Lastly, spot oil rebounded on Friday (May 26), after losing almost 5 percent following OPEC’s nine-month extension agreement to curb production to boost prices. The deal disappointed investors who were expecting deeper or longer output cuts.

On Friday, June West Texas Intermediate crude rose 18 cents, or 0.4 percent, to $49.08 a barrel. July Brent crude on London’s ICE Futures exchange was down 2 cents, or less than 0.1 percent, at $51.44.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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