Gold prices have skyrocketed to a five-month high above $1,270 in the wake of geopolitical uncertainty in the Middle East and after the Labor Department issued a lower-than-anticipated jobs report in March, and analysts at Blanchard and Company say they expect more gains for precious metals on the horizon.
“Gold’s price action following the missile attack on Syria was a traditional flight-to-safety move, and the jobs report only accentuated some of the weakness in the economy that has been overshadowed by post-election equities enthusiasm,” said Blanchard and Company President & CEO David Beahm. “With uncertainty around President’s Trumps policy toward Syria going forward, gold should benefit from safe-haven buying.”
Beahm said safe-haven buying and ideas that the weak jobs report could delay or slow future Fed interest rate hikes propelled the price of gold to a five month high, and rising geopolitical uncertainty and concerns about cracks in the economic picture have created fresh investor appetite for gold. Increasing tensions with North Korea and upcoming French elections are also boosting gold demand.
A potential conflict with Russia in the Syrian matter is another factor that could impact the price of gold to the upside, Beahm added. On Friday, Russian President Vladimir Putin called the missile strike against Syria “an act of aggression against a sovereign state delivered in violation of international law under a far-fetched pretext.” Russia also initiated an emergency meeting of the United Nations Security Council to discuss the incident, and on Friday afternoon it was reported that Russian warships were steaming toward the U.S. Navy warships that launched the Syrian attack.
“Last July, gold prices traded as high as the $1,390 an ounce, and precious metals traders are monitoring the $1,265 an ounce level closely,” Beahm said. “Sustained strength above that zone could be the signal for another strong rally wave in gold with the $1,300 level as the next bullish chart objective. Blanchard wouldn’t be surprised if we see this level in the near term with so much geopolitical uncertainty and no clear U.S. policy being articulated.”