Gold hit its highest in about 3 1/2 months on Friday as the dollar headed for its first week of decline in three after the new U.S. finance chief poured cold water on the “Trumpflation trade” that had boosted the greenback this year.
Treasury Secretary Steven Mnuchin said on Thursday that any steps U.S. President Donald Trump’s administration takes on policy would probably have only limited impact this year, though he wants to see tax reform passed by August. The comments suggested much work was still needed on the sweeping tax-reform plan that Mnuchin called his main priority, and which investors had bet would stoke growth and inflation this year.
“We’ve got a vacuum of (U.S. domestic) policy, real (interest) rates going down, the dollar going sideways and geopolitical (jitters) around the world … all helping gold,” ICBC Standard Bank analyst Tom Kendall said. “There is apparently a move of institutional investor money into gold and there are usually very good reasons for that.”
Spot gold had risen 0.6 percent to $1,256.31 per ounce by 1059 GMT, having touched its highest since Nov. 11 at $1,257.19 earlier in the session. U.S. gold futures rose 0.5 percent to $1,257.30. Also supporting bullion were tempered expectations of a U.S. rate hike in March after minutes from the Federal Reserve’s latest policy meeting sounded less hawkish than expected.
