Gold Still Needs More After Trump Pulls Support From Iran Nuclear Deal
(Kitco News)- Gold prices briefly rallied to session highs as PresidentDonald Trump officially pulled U.S. support from the international nuclearagreement with Iran; however, analysts say that more needs to happen for goldto see sustainable gains.
According to some market observers, Trump’s comment on theagreement, formally known as the Joint Comprehensive Plan of Action,was not a surprise as he has been a major critic even before he becamepresident. Gold prices briefly jumped following the news, but have backed downmodestly; June gold futures last trading at $1,316.20 an ounce, up 0.17% on the day.
Trump continued hiscriticism of the Iran deal during his press conference, saying that theagreement hasn’t bought calm and peace to the region and it never will. He saidthat the agreement would eventually cause a nuclear arms race throughout theMiddle East.
He described the 2015international agreement as a “decaying and rotten structure” that is “defectiveto its core.”
Trump said that hisadministration will reinstate the “highest level of economic sanctions,”against Iran and any country that supports the regime of terror.
Bart Melek, head ofcommodity strategy at TD Securities, said that while gold could push to $1,320in the near-term, markets need more specific information to build a lastinguptrend.
“This means that there ismore risk in the world, but the markets need to see how this is going to impacteconomic growth and interest rate expectations,” he said. “We need to see whathappens in equity markets in the next few days to see the true impact on gold.”
Melek added that the marketwill also need more information on what sanctions will be put on Iran. He notedthat so far the U.S. is the only country to pull its support for the nuclearagreement.
Bill Baruch, president ofBlue Line Futures, said that he is not surprised that gold bounced slightly offits lows following Trump’s announcement. He added that regardless of thegeopolitical outlook, gold at the bottom end of its current trading rangerepresents a good trading opportunity.
John Weyer,Director Commercial Hedging Services, said that while the news will providesome support for gold in the near-term, he personally doubts that the marketwill be able to hold its gains, unless there is a shift in the global economy thatimpacts investor sentiment.
He added that one scenario that would be positive for gold isif oil prices push higher, boosting inflation, which would create some risk foreconomic growth.
So far, the oil market has taken Trump’s announcement in stride. WestTexas Intermediate crude futures are down from session highs, last trading at$69.87 per barrel, down more than 1% on the day.
For Kitco News
Follow neils_C
nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.