As mentioned earlier this week, the correlation is not one that you’d typically see but the developments this week is making for that. Amid political uncertainties in Japan and France, adding to the selloff in their respective bond markets, it is helping to benefit the dollar as the yen and euro struggle.
But at the same time, this fresh bout of political turmoil especially in France makes for good reason for investors to chase safety. And in a time where the yen might not be able to provide that, gold is a safe bet amid the myriad of other fundamental factors that has led to the stirring rally over the past two years.
I would’ve expected some heavier profit-taking as we got to the $4,000 mark today but amid another round of risk pricing this morning, gold looks to be cruising past the key level to $4,019 now:
I still wouldn’t rule out potential for profit-taking later today or during the week. But amid the political chaos in France and Japan’s own domestic struggles, it’s a timely reminder of why gold continues to shine in this new political era. That not to mention that major central banks are also continuing to stockpile on the precious metal, as seen with China here.
This article was written by Justin Low at investinglive.com.