Political Uncertainty Pushing Gold Up

Political Uncertainty Pushing Gold Up

Gold rose on the notion of increasing political uncertainty and a weakened dollar, after a disappointing press-conference for analysts hoping for some insight into the impending economic conditions during the imminent Trump administration.

For months gold rallied and fell, as the tone of political certainly came and went with the results from various polls during the U.S. presidential race. However, the price of the precious metal fell steeply on news of the Trump victory, as the dollar soared.

As is common, a strong dollar usually pushes the price of gold and other dollar-denominated commodities down, consequent of it becoming more expensive for holders of foreign currencies.

Such a notion was apparent subsequent to Trump’s election. With the dollar-rally, a corresponding fall was experienced with the price of spot gold. Of which fell from a peak of $1304.95/ounce on November 4 to a trough of $1128.14/ounce on December 16. With such a rise consequent of the dollar’s surge during the election of President Trump.

However, recent political instability has pushed the price of gold upwards for the first time since October 2016. As investors and analysts are desperately attempting to deduce any indication of the direction to be assumed under the imminent Trump administration.

With a programme of significant stimulus and a protectionist stance, particularly in regard to manufacturing, the presumed premise of the Trump economic agenda appeared to be relatively clear. However, in recent weeks such clarity has faded, with analysts reconsidering the true nature of the new administration’s economic direction.

The price of spot gold has risen from the low of $1128.14/ounce on December 16 to stand at $1195.84/ounce at 15:51 EST, marking a considerable recovery from where it was, and reversing much of the reduction in value experienced subsequent to the election of Mr. Trump.

Continued political uncertainty is expected to provide maintained stimulation regarding the bull-market experienced in recent trading sessions, and the inauguration of Donald Trump on January 20 is expected to push the dollar down further, thus enhancing the bullish sentiment maintained in recent trading sessions by the precious metal.

 

Chart from: https://www.dailyfx.com/

Showing daily fluctuations in the value of gold. The significant drop is subsequent to the election of Donald Trump, as the surge of the U.S. dollar increased the price of dollar-denominated commodities, such as gold. The increase apparent at the recent side of the chart represents the increased political uncertainty fuelling a rise in gold in trading sessions since late December.

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