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The gold price spiked initially and then gave up its gains after the official impeachment investigation was announced.
Less than 24 hours after US Democratic House Speaker Nancy Pelosi announced the launch of an official impeachment investigation regarding President Donald Trump’s dealings with Ukraine, the gold price was steady after an initial jump on Tuesday (September 24).
As of 10:00 a.m. EDT on Tuesday, gold was sitting at US$1,517.20 per ounce; following the announcement from the speaker, the value of the yellow metal surged to US$1,534.10.
By 10:14 a.m. EDT on Wednesday (September 25), the yellow metal had lost some of the prior day’s momentum to hold near US$1,525.98.
Concern that the investigation could rattle markets, creating uncertainty, led to a stock selloff while gold was able to capitalize on the volatility.
“Gold is holding on to the gains from yesterday because of announcements which seem to have hit the dollar and risk appetite,” said OANDA Senior Market Analyst Craig Erlam.
“(That) is almost perfect for gold.” He went on to note that the coming days will be ripe with commentary that will likely weigh on risk appetite.
At 11:48 a.m. EDT on Wednesday, gold’s gains had been completely lost, leaving it at US$1,511.53.
Early in the month, gold’s value rocketed up to US$1,546.70 — the highest price the yellow metal has traded for since March 2013.
While the price has fluctuated over the last few weeks, EB Tucker, director at Metalla Royalty & Streaming (TSXV:MTA,OTCQX:MTAFF), sees it remaining rangebound at the US$1,500 mark.
“In our view, gold’s going to stabilize here at US$1,500, (and) silver will go from US$18 (per ounce) to US$20. And so, we are focusing a lot of our capital and resources on silver, because that to us is the easiest trade right now,” Tucker told the Investing News Network (INN) at this year’s Denver Gold Forum.
“And I would be shocked if that doesn’t happen before American Thanksgiving, which is only about eight weeks away,” he added.
Of course, that was prior to the impeachment announcement.
For many, gold is considered a safe haven during times of political unrest and economic uncertainty, issues that are currently plaguing the international markets. The current political climate in Washington is likely to continue to impact markets, resulting in a higher gold value.
How high remains to be seen.
A US Federal Reserve interest rate cut in mid-September, paired with the turbulent political landscape, could drive gold to new highs.
At the recent Precious Metals Summit, Rob McEwen, chairman and chief owner of McEwen Mining (TSX:MUX,NYSE:MUX), told INN he sees more gains in store for the yellow metal.
“I’ve always had a US$5,000 number, and I think it can go much higher than that,” he commented.
And now, in light of recent events, the possibility isn’t looking so unrealistic.
As of 12:34 pm EDT on Wednesday, gold was selling at US$1,503.98.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
