Gold and silver hit record highs on geopolitical risk, threats to Fed independence
Political instability in Iran and the latest threats to US Fed independence have pushed gold and silver to record highs.
The price of precious metals have hit new all-time highs on geopolitical risks and further threats to Fed independence.
Precious metals rise as political instability in Iran increases
Fresh geopolitical risks have pushed gold and silver prices to fresh record highs. Instability in Iran and the rising possibility of revolution in the country has sparked fresh buying of precious metals. It’s added to geopolitical tailwinds stemming from US foreign policy and last week’s invasion of Venezuela and capture of its former President Nicolas Maduro.
The demand for gold and silver is underpinned by the rising possibility that the Iranian regime could collapse. In addition, there is the chance of US intervention, with involvement possibly including cyber attacks or even strikes on military targets. That’s adding to fears that US foreign policy could push adversaries towards US Dollar alternatives.
Threats to Fed independence add to precious metal rally
The rally in precious metals was given another boost by news that the US Department of Justice has subpoenaed the US Federal Reserve in relation to testimony delivered by Chairperson Jerome Powell regarding cost overruns for renovations at the Fed’s office buildings. The move has been interpreted as the latest attempt by the Trump administration to undermine US Federal Reserve independence, with a statement from Chairperson Powell accusing the administration of as much fanning fears about a clash between the White House and Fed. The dynamic is undermining confidence in US policymakers and future monetary policy, adding to push into alternative stores of value.
Gold breaks out as bull trend continues
Gold has broken out to fresh record highs, extending its uptrend as the yellow metal closes in on $US4600 per ounce. Gold has been consolidating in a familiar way, carving out a symmetrical triangle before its break-out, a classic continuation pattern. The fresh all time highs are a bullish signal that risk remains skewed to the upside for gold. Technical support at previous resistance at the last all time high $US4550 may be closely watched for evidence of fresh consolidation.
(Source: Trading View)
(Past performance is not a reliable indicator of future results)