Gold rose for the third consecutive trading day Tuesday after comments from top White House trade advisor Peter Navarro and President Donald Trump tweaked investors. February gold COMEX futures finished the day at $1,209.80 per ounce, up 1.3%.
So far this year, COMEX futures have gained 5.1% vs. a 1.7% gain for the S&P 500.
Navarro, a professor at UC-Irvine and free-trade skeptic, told the Financial Times that the Euro was "grossly undervalued" and accused Germany of being a currency manipulator.
In a meeting with pharmaceutical industry executives, Trump said other countries have been devaluing their currencies, Reuters reported.
The jittery reaction to Trump's comments is no surprise, as his administration's awkward policy rollout through his first week-plus in office has chipped away at investors' sense of optimism.
"When I'm looking at gold today, [the question is] largely whether it's a first-round effect or second-round effect from U.S. politics," RBC strategist Chris Louney said in a phone interview.
As Louney explained, investors are increasing their positions in the precious metal either as a direct reaction to the distressing headlines surrounding Trump or as a response to fluctuations in other asset classes sparked by the same information.
"Any time the market is surprised, you're going to get a move," Louney said. "As we grind through all of these items, whatever the news is, gold will react just as every asset reacts, like how equities react, how the dollar reacts, how rates react."
The long-term view for the safe-haven commodity may be more subdued. Louney only has a $1,245/oz average forecast for gold in 2017, citing a high dollar, relatively stable U.S. equities and the likelihood of further interest rate hikes from the Federal Reserve as macro factors that should limit any near-term Trump-inflicted gains.
"We really think the main reason to hold gold is a risk overlay trade," he said.