Gold Price Rises to Highest Levels Since November Amid Geopolitical Tension

London (April 20)  Rising geopolitical tension between the U.S., Syria and Russia as well as between the U.S. and North Korea fueled demand for so-called “safe haven” assets last week.

Gold prices rose their highest levels since last November (see the chart below). Bond yields fell, boosting both bond prices and interest-rate-sensitive sectors of the market such as REITs.

Gold Approaches its November Highs

Gold Approaches its November Highs

In addition, oil extended its recent gains early in the week due to geopolitical concerns and because of growing expectations that big oil producers would extend their recent output cuts to mitigate the risk of an oversupply of oil. Oil’s recent rally has benefited commodity-focused equities.

Meanwhile, global political uncertainty took a toll on emerging markets last week—especially Russia and South Korea.

In Europe, economic data was mixed.

Germany’s ZEW survey of investor and analyst expectations for economic developments came in much stronger than expected, as did German industrial production.

Producer prices in the UK were also stronger than expected–a sign of a strengthening economy.

France, Italy and the UK reported soft industrial production numbers.

In the fixed-income market, lower interest rates benefited corporate credits and longer-duration bonds, in particular. In contrast, international government bonds and TIPS (Treasury inflation-protected securities) underperformed the broader fixed-income market. Currencies had a negative effect on international Treasuries, while softening expectations for inflation in the short-term hurt TIPS.

Soiurce: ETFtrends