3 Reasons You May See Strength In Gold This Week
Geopolitics will once again take center stage this week on Wall Street, as a trio of potential market catalysts could have a major impact on gold prices. When investors get uncertain about potential shifts in the political backdrop, they often turn to gold as an investment safe haven. Here’s a look at what gold investors will be watching closely this week./p>
On Thursday, the U.K. will have its most significant political event since last year’s Brexit vote shocked the world. The U.K. is holding a special election to determine which party will lead the nation through its Brexit negotiation process. Polls show Prime Minister Theresa May’s Conservative Party holds a narrow lead over the opposition Labour Party and others. Labour Party leader Jeremy Corbyn has called May’s proposed Brexit plan “reckless.” On Thursday, markets will see whether or not U.K. voters agree.
On Wednesday and Thursday, the European Central Bank will be meeting to discuss monetary policy. Economic numbers in Europe have been picking up of late, and the bond market seems to be pricing in expectations of more hawkish language from the ECB. In light of Europe registering its strongest growth in six years in the month of May, the ECB will likely up its full-year GDP growth estimate from the 1.8 percent rate it estimated in March.
Also on Thursday, former FBI Director James Comey will be testifying in front of the Senate Intelligence Committee. Comey is expected to be asked about conversations he had with President Donald Trump prior to Comey’s firing. In interviews, Trump has given conflicting reports about the reasons for Comey’s release and whether he asked Comey to discontinue the FBI investigation into former National Security Advisor Michael Flynn’s ties to Russia. The Comey testimony could result in more public calls for a Trump impeachment if Comey suggests the president could be guilty of obstruction of justice.
Gold investors may already be anticipating some political curveballs this week. In the past month, the SPDR Gold Trust (ETF) (NYSE:GLD) is up 5.1 percent, the Credit Suisse AG – VelocityShares 3x Long Gold ETN (NASDAQ:UGLD) is up 15.2 percent and the Direxion Shares Exchange Traded Fund Trust (NYSE:JNUG) is up 20.6 percent.
Image Credit:By The White House from Washington, DC (President Trump’s First 100 Days: 8) [Public domain], via Wikimedia Commons
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