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Gold just surged to a five-month high—and 'has the chance to go further'

  • Some strategists see further upside for the commodity often considered a safe haven asset.
  • "As a flight to safety into U.S. Treasurys comes in and yields continue to compress, gold becomes a lot more attractive," Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management said.
  • Gold in Wednesday trading rallied to its highest level in five months.

Some strategists see further upside for a commodity that typically trends higher in times of geopolitical and economic unrest.

Gold rallied to its highest level in five months in Wednesday trading, gaining over $9 per ounce in the session as tension mounted around the world. Secretary of State Rex Tillerson said Wednesday at a joint news conference with Russian Foreign Minister Sergey Lavrov that U.S.-Russia relations were "at a low point," and called for improvement after the U.S. missile astrikes in Syria last week.

"As a flight to safety into U.S. Treasurys comes in and yields continue to compress, gold becomes a lot more attractive," Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, said Wednesday on CNBC's "Power Lunch."

He added about the traditionally safe haven asset: "I do think with the Trump administration and with the militarization that's going on right now, the risk is very high, so gold does have the chance to go further."

Indeed, the yield on the 10-year U.S. Treasury note fell to a five-month low on Wednesday, while the yield on the two-year note also declined, along with the value of the Udollar. Bullion is highly sensitive to U.S. interest rates, which raise the opportunity cost of holding nonyielding, dollar-denominated gold.

Gold will likely gain 4 to 5 percent in the next six months, said Chad Morganlander, portfolio manager at Washington Crossing Advisors.

"We think risk is going to elevate, financial conditions will tighten; one is geopolitical risk, not only internationally, but with domestic policy uncertainty on the tax bill," he said Wednesday on "Power Lunch."

Gold is up nearly 12 percent year to date.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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