Investors appear to have understood Mnuchin’s comments to mean that the U.S. administration’s ability to implement fiscal policy to stimulate the U.S. economy is somewhat limited. Therefore, this could be part of the reason that explains the uptick in gold prices.
“The strength of far right candidates in upcoming European elections is also reason for investors to flock to the haven asset,” Nitesh Shah commodities strategist with ETF Securities, told CNBC in an email on Friday.
Anti-immigration and far-right French presidential candidate Marine Le Pen currently leads in the latest opinion polls and has vowed to renegotiate the terms of France’s membership of the European Union.
Though, ultimately her chances of emerging victorious in May are relatively low, investors appear to be increasingly nervous after failing to foresee the outcomes of the U.K.’s Brexit vote and U.S. President Donald Trump’s victory.
Elections in the Netherlands, Germany and potentially even snap elections in Italy and Greece are all combine for investors to begin turning their attention to safe haven assets such as gold in order to protect their portfolios from shock events, Shah concluded.
