Gold price extends gain in Trump era as dollar wobbles
London (Jan 23) Gold prices gained firmly Monday, building on what was a fourth straight weekly advance through Friday, on the back of weakness in the U.S. dollar and uncertainty for trade and economic growth at the start of Donald Trump’s presidency.
Gold for February delivery GCG7, +0.78% climbed $9.70 or 0.8%, to $1,214.60 an ounce. It settled at $1,204.90 an ounce Friday, only briefly dropping below the closely watched $1,200 level in that trading session.
March silver SIH7, +0.93% added 13 cents, or 0.8%, to $17.16 an ounce, also building on its 1.6% weekly gain from last week.
“We believe that gold is finding support from the weaker U.S. dollar, which depreciated noticeably following the inaugural speech given by the new U.S. President Donald Trump [on Friday] and is trading at a 6 ½-week low against the euro this morning,” said Carsten Fritsch and the commodities team at Commerzbank, in a note.
Yields on 10-year U.S. Treasury notes TMUBMUSD10Y, -0.15% have also fallen sharply again after having risen for a time, although they were mostly flat on Monday. Bond prices move in the opposite direction of yields. But selling pressure over the past several trading sessions resulted in the first weekly rise in Treasurys in a month last week, accounting for some of the gain in gold which doesn’t bear a yield.
“Trump again used strong words that appear detached from reality in his speech, showing once more how unpredictable he is,” the analysts opined. “The uncertainty surrounding his future policy is clearly generating increased demand for gold as a safe haven, as can be seen from the recent moderate inflows into [exchange-traded funds] again.”
The ICE U.S. Dollar Index DXY, -0.28% fell 0.2% at 100.44 Monday.
In addition to its haven status, gold tends to move inversely to the dollar because a stronger greenback can make commodities pegged to the buck, including metals, more expensive to buyers using other monetary units.
In exchange-traded funds, the SPDR Gold Trust GLD, +0.24% rose 0.2% premarket. The iShares Silver SLV, +0.43% rose less than 0.3% and the VanEck Vectors Gold Miners ETF GDX, +1.21% added 0.9% for the session.
Source: MarketWatch
