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With dollar weakness spurred on by comments from Treasury Secretary Steve Mnuchin at the World Economic Forum in Davos that suggested the Trump administration might be targeting a weaker currency, gold prices are strengthening.
While the tax reforms passed by the Trump administration have certainly buoyed optimism about the American economy, that optimism also comes with some expectation that inflation may tick up. Gold is a hedge against inflation, and a weakening currency. It’s no surprise investors are taking interest once again in the precious metals market.
Amrith Ramkumar reports:
More than $8 billion flowed into gold-backed exchange-traded funds in 2017, according to data compiled by the World Gold Council. When coupled with the 14% rise in gold prices, that influx brought the total assets managed by those ETFs to their highest level since September 2016.
Meantime, hedge funds and other speculative investors increased net bets on higher gold prices in the last six weeks through Jan. 23, according to the Commodity Futures Trading Commission. Net bullish bets are near their 2017 highs from September.
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