Gold News

Gold Price Hits 8-Week High as Trump 'Shocks' Nato, UK 'Threatens' EU Over Brexit, Davos Calls for 'Unity'

GOLD PRICES jumped near 8-week highs in wholesale bullion trade Monday as weekend comments from US president-elect Donald Trump about the Nato military alliance caused shock in European capitals, and German politicians rebuked UK threats to slash corporate tax rates if a 'hard Brexit' from the European Union sees Britain lose access to the single market.
Dollar gold prices gapped higher from Friday's finish and then rose above $1208 per ounce, some 4.9% higher for 2017 to date, before easing $5 lower.
Gold priced in Sterling meantime touched £1006 per ounce – its highest since 11 November – as the Pound sank ahead of a key speech on the UK Government's Brexit negotiation plans due from Prime Minister Theresa May on Tuesday.
Chart of the gold price in British Pounds, last 20 years
GBP gold prices then eased £10 lower as world stock markets fell and government bond prices rose, nudging interest rates down.
"The British people are not going to lie down and say, too bad...if we have no access to the European market," UK finance minister Philip Hammond told Germany's Welt am Sonntag newspaper yesterday, saying Britain would "change its economic model" – widely viewed as a threat to slash corporation tax to attract multi-national businesses.
"The [UK's] two major economic weaknesses," counters German CDU party deputy-leader Norbert Röttgen "are the considerable trade deficit and the large budget deficit.
"Hammond's tax cuts threats are therefore threats of expression of British helplessness."
China will meantime "make joint efforts" when President Xi Jinping attends his first World Economic Forum in the Swiss resort of Davos this week "to explore long-term measures for the world's development, establish a community of common destiny for mankind, and safeguard international peace and stability," he said on arriving in Zurich on Sunday.
WEF founder Klaus Schwab has called on the 30,000 attendees – from actor Matt Damon to singer Shakira, business leaders, politicians, institutional investors and journalists – to " overcome the present mood of divisiveness and negativism."
The European Union "is basically a vehicle for Germany," The Times of London yesterday quoted US president-elect Donald Trump, who has now added BMW to the list of foreign auto-makers facing a 35% import duty for importing new cars to the United States.
"If you ask me, more countries will leave," Trump said, adding that "I think we’re gonna get something done very quickly" on a new trade deal with the UK while calling the Nato military alliance "obsolete".
That "caused astonishment and anxiety, not just in Brussels," says Germany's foreign minister Frank-Walter Steinmeier.
"Nato is very important," Trump told the Times, but only 5 countries are "paying what they’re supposed to" at 2% of GDP on defense.
The US is currently sending more troops to help train and support Nato partners Poland, Latvia, Lithuania and Estonia, all of whom border Russia.
Gold prices also jumped against the Chinese Yuan, fixing above 270 per gram for the first time since end-November at Shanghai's benchmarking auction but cutting the premium over London quotes to $11 per ounce as wholesale stockpiling eased ahead of the key Lunar New Year holidays, starting at the end of this week.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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