Gold rises as Trump political firestorm boosts bullion’s allure as safe haven

NEW YORK/LONDON — Gold rose on Friday and was on track for its best week in five as the dollar softened on political turbulence in the United States, boosting bullion’s safe-haven appeal.

Spot gold was up 0.60% at $1,253.87 an ounce by 2:47 p.m. EDT (1847 GMT), putting it up 2% for the week.

US gold futures settled up 0.06% at $1,253.60.

“We have political turmoil in the US which has driven the dollar lower... this week’s sentiment has supported gold,” Danske Bank analyst Jens Pedersen said, adding that it was unclear whether bullion would hold on to the gains into next week.

Gold is often seen as an alternative investment during times of geopolitical and financial uncertainty, gaining alongside bond yields and the yen while stocks usually take a hit.

US President Donald Trump last week fired Federal Bureau of Investigation Director James Comey. This triggered a political firestorm that culminated on Wednesday in the Justice Department’s appointment of a special counsel to probe possible ties between Russia and Mr. Trump’s 2016 presidential campaign.

The dollar index, which measures the greenback against a basket of six major currencies, was poised for its worst week in more than a year while world stocks edged up.

“Political risk is back on again after market participants became overly complacent following the outcome of the French elections,” Commerzbank analyst Carsten Fritsch said.

“Risk sentiment took a major hit,” he said.

New applications for US jobless benefits unexpectedly fell last week and the number of Americans on unemployment rolls tumbled to a 28-1/2-year low, pointing to rapidly shrinking labor market slack.

St. Louis Federal Reserve President James Bullard said the Fed’s expected plans for rate increases may be too fast for an economy that has shown recent signs of weakness.

“After he spoke, it was enough to push the dollar through some key levels that brought gold up pretty easily,” said Bob Haberkorn, senior market strategist for RJO Futures in Chicago.

Federal funds futures implied traders saw about a 74% chance the Fed would raise interest rates in June, CME Group’s FedWatch program showed.