After an initial dip in the price of gold early in the trading session Tuesday, gold finished strong to close out the day flat at $1,238.90, (-$0.20).
The puzzling thing is the ICE Dollar index was up 0.5%, showing a strong U.S. Dollar. The US Dollar and Gold typically share an inverse market relationship, which would account for the drop in gold early in the trading day.
Many analysts are attributing the resilience of gold to the rise of far-right political movements in Europe — more specifically, recent polls suggesting France’s Marine Le Pen widening her lead by two per cent in first-round polls. Le Pen has promised a referendum to seek France’s exit from the European Union, mirroring the Brexit vote in the U.K. last year, which saw gold skyrocket.
A successful Frexit vote would further destabilize the European Union and their shared currency, the Euro. The rise of far-right movements in Germany and The Netherlands has also raised concerns about the Euro, as both countries face federal elections in 2017.
Source is MarketWatch: Gold Resilient, Closes Par