Introduction
Political uncertainties and the purchases of central banks play a significant role in the development of the gold price, especially in the context of tensions between Donald Trump and the Federal Reserve (Fed). Here are some key factors that investors should pay attention to:
Political Uncertainties
Trump vs. Fed
The tensions between Donald Trump and the Fed have historically led to political uncertainties that influence the gold price. Trump’s criticism of the Fed and his trade policy have prompted investors to seek safe assets like gold.
Trade War with China
Trump’s statements regarding the trade war with China and his announcement to be “very nice” during negotiations and to lower tariffs have influenced market sentiment. Such remarks can increase investors’ risk appetite and impact the gold price.
Central Bank Purchases
Central Bank Purchases
The purchases of gold by central banks are a crucial factor in the rise of the gold price. These purchases signal that central banks view gold as a safe investment, which can drive the price higher.
Dollar Weakness and Interest Rate Concerns
A weakening US dollar and uncertainties regarding interest rates can also lead to an increase in the gold price, as investors often flee to safe havens like gold during such times.
Market Reactions
Risk On vs. Risk Off
Market sentiment shifts between “Risk On” and “Risk Off” depending on political developments. In times of uncertainty, investors seek safety in gold, while positive news prompts them to invest in riskier assets like stocks.
Technical Corrections
After a significant increase in the gold price, such as the recent peak reaching a record high of $3,500, technical corrections may occur. These corrections can be seen as an opportunity for investors to take profits or reinvest in gold.
Overall, political uncertainties and central bank purchases are critical factors in the development of the gold price. Investors should keep these factors in mind to make informed decisions.