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Published: Mon, November 14, 2016
Economy | By Melissa Porter

Gold Up As Markets Take A Breather After Trump Shock

Gold Up As Markets Take A Breather After Trump Shock

Asian shares dipped while the dollar strengthened broadly on Friday as US bond yields soared on expectations US President-elect Donald Trump's policies would stoke inflation. Prices sank 1.5 per cent on Thursday to end at the lowest in more than three weeks as the Dow Jones Industrial Average gained to a record and the greenback climbed.

Gold prices saw a surprise finish lower on Wednesday after Donald Trump's stunning US presidential win as investors muddled through the uncertainties raised by the Republican's unorthodox approach to politics.

The most active gold contract for December delivery fell 1 USA dollars, or 0.08 percent, to settle at 1,273.50 dollars per ounce.

USA stocks have surged on expectations for President-elect Donald Trump's policy stance, with investors favoring industrials, biotech and financials.

Futures prices for gold GCZ6, +0.98% had spiked higher by as much as roughly $64 an ounce, or 5%, as USA election results rolled in late Tuesday into early Wednesday morning. Spot gold may bounce moderately to resistance at $1,271 per ounce before falling, as it has found a support at $1,255, according to Reuters technical analyst Wang Tao. was down 0.2 percent at $18.54 an ounce but was on track for a fourth weekly rise.

"We're seeing a complete reassessment of various asset classes following the Trump win earlier this week".

The Federal Reserve could raise interest rates more quickly if Washington used lower taxes or higher spending to boost economic growth, Richmond Fed President Jeffrey Lacker said on Thursday. "The medium-term gold outlook might even be a bit negative for prices on a Trump presidency", she added. "The combination of rising real yields and the stronger dollar is really hurting sentiment in gold", said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Gold is highly sensitive to rising rates. Analysts note that despite an initial massive spike in gold and an enormous drop in USA equities options, the precious metal stabilized before the market opened and ended lower after the market's close.

"Platinum's fundamentals are not as tight as palladium", said James Steel, chief metals analyst for HSBC Securities.

Spot gold was up about 0.2 percent at, 261.71 an ounce at 0038 GMT.

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