• Gold hits 12-week high
  • USD Gold price up 4.85% in last month
  • Sabre-rattling from Trump administration set-to benefit gold
  • Iran upset and Middle East tensions could drive oil and gold prices up.
  • Financial Times foresees “not only currency wars but a fully fledged trade confrontation that could be disastrous for the world economy.”
  • Royal Mint producing 50 % more gold bullion coins and bars compared to 2016
  • Utah moves to hold public funds in gold
  • WGC report demand for gold hit four-year high in 2016
  • Investment demand climbed by 70% last year fuelled by geopolitical uncertainties 

The Trump administration continues to sabre-rattle at global powers and threatens to disrupt the status-quo of international relations. Comments in just 24-hours by Donald Trump and his team have included attacking an Ivy League university, a nuclear power and two of the United States’ key trading partners.

We continue to look on as the unconventional tweets and announcement appear, but in the meantime watch the gold price hit 12-week highs and inflows of roughly 1.2 million ounces surge into gold ETFs, as uncertainty continues to drive investors towards safe havens.

FOMC stand-by to watch the Donald

Many market observers may have found a funny sort of comfort in seeing the statement of the FOMC meeting, this week. A funny thing to say, but given each day appears to bring a new surprise there is something reassuring that meetings and announcements from the likes of the Federal Reserve, continue as scheduled.

Unsurprisingly, and despite Janet Yellen’s warnings of a ‘nasty surprise on inflation if it was too slow with rate hikes’, the Federal Reserve held back from a further rate rise this week. The committee painted a fairly positive outlook of the economy, it was perceived to be dovish. The statement helped to ultimately push gold prices higher as the dollar fell in disappointment to no rate hike. For some this was an example of ‘The Fed that cried Wolf.’

 

The Fed is still expected to hike rates up at points throughout the year, but uncertainty about when and how much remains. The FOMC are waiting for further disclosure President Trump’s economic policy.

Gold was the only commodity that climbed higher (+0.9%) following the Fed announcement.

Iran on notice: be on notice to buy gold

Earlier this week Iran tested a ballistic missile and attacked a Saudi navy vessel. The Trump did not disappoint in letting the world that they were unhappy, through both Twitter and Mike Flynn.

Mike Flynn, Trump’s national security advisor stated, ““Recent Iranian actions involving a provocative ballistic missile launch and an attack against a Saudi naval vessel conducted by Iran-supported Houthi militants underscore what should have been clear to the international community all along about Iran’s destabilizing behaviour across the entire Middle East”

Flynn concluded, “As of today, we are officially putting Iran on notice.” This was followed by a Tweet confirming this position, by Trump.

Fordham University maritime law professor and former US Navy Commander Lawrence Brennan spoke to Business Insider on Monday.

“This attack is likely to impact US naval operations and rules of engagement (ROE) in nearby waters,” said Brennan, who pointed out that Iranian ships frequently harass and sail very closely to US Navy ships.

Brennan suggested that in light of the recent suicide boat attacks, the US Navy should now consider shooting Iranian or hostile vessels that get too close.

Given that Trump has so far proven his intention to follow through on campaign promises, we expect him to do the same with Iran. Whilst campaigning in Florida, in September, he told a rally of thousands that when it comes to Iran, “when they circle our beautiful destroyers with their little boats, and they make gestures at our people that they shouldn’t be allowed to make, they will be shot out of the water.”

The remarks from Trump and Flynn took immediate effect on the US dollar (already weakened by the FOMC’s statement) and sent gold higher (as shown in this Business Insider chart).

Iran weighed in on the matter with defence minster Hossein Dehghan telling Iranian state media that contrary to the claims of the US,  “The test was not a violation of a nuclear deal with world powers or any UN resolution,”

Later Ali Akbar Velayati, senior adviser to Iran’s supreme leader Ali Khamenei, told the Fars news agency, “”This is not the first time that an inexperienced person has threatened Iran … the American government will understand that threatening Iran is useless.”

Iran to dump the dollar but stocking up on gold

Of course, this wasn’t the first time President Trump has rattled the Iranians since he took office. When he declared a travel ban on seven countries, including Iran, the country’