The ousting of White House chief strategist Steve Bannon sent gold prices just below a recent premium.
Prices remain high.
Gold peaked due to the North Korea/US stand off over Guam. It decreased upon the subsequent drawback, as confidence strengthened that nuclear war wasn’t imminent. However, the fear of conflict remains in investors’ minds.
Gold is a panic asset.
When you’re worried that performing assets, such as shares or property, are about to collapse in value, gold is what you buy. Whilst prices do fluctuate, gold will always command value because it’s a universally accepted currency.
It’s also a useful gauge of market confidence in reaction to world events: if prices fall, investors are confident that performing assets are going to increase in value. If there’s a sharp rise, it suggests that intervention may be needed to calm the markets.
The terrorist attack in Barcelona and resignations from a business committee in reaction to Trump’s response to Charlottesville had also caused gold prices to strengthen.
This rise was supported by a weak dollar: the markets think there’s limited chance of an interest rate rise because US inflation is low, despite the country nearing full employment.
However, it’s believed that gold has reached its 2017 peak: US equities are predicted to continue growing, so the risk prerequisite for further gold purchases should cool off.