US gold futures jumped above $US1,200 an ounce overnight and are now at highs not seen since last November and the early days of the post-Trump election boomlet.
That saw shares and the US dollar surge and gold sold down heavily. Now the Trump rally is running out of puff – the US dollar is easing, helped by Trump whinging about how its high value is ‘bad’ for US companies, and a continuing slide in US bond yields.
Gold prices though have rebounded in 2017 so far and are up 5.6%, against the more modest gain of 0.4% for the Dow and the 1.4% rise for the S&P 500.
Gold fell from about $US1,300 at the start of November ahead of the US election, to as low as $US1,128 in late-December.
Silver has done even better (as it often does). It is up about 7.3%.
The contrast though from the start of 2017 to the start of 2016 is also quite telling. A year ago shares and commodities had their worst start to a year on record, but all ended the year with solid to huge gains (iron ore being up 81%!)
Silver was up 0.7% from the start of last year to January 18, this year it is booming. Gold was up around 2.8% in the first three weeks of 2016 – this year the gain is double that.
The Aussie dollar traded around 74.75 this morning in Asia up three US cents from the start of 2017 in something of a surprise for some in the markets who had tipped the currency to fall under 70 US cents this year.
The weaker greenback has helped push commodity prices (besides gold and silver) higher – oil is doing nicely, as are copper, tin, lead, wheat and grains and iron ore.
The weaker US dollar since early January has helped gold and heightened uncertainty around the UK’s Brexit plans sent the price of gold rallying yesterday and it jumped as much as 1.3% to $1,218 a troy ounce.
Comex February gold rose $US16.70, or 1.4%, to settle at $US1,212.90 an ounce-the highest finish since November 17.
On top of this there is now more than enough doubt in the market over the longevity and effectiveness of US President-elect Donald Trump’s fiscal policies (run up the deficit, huge spending, slash taxes) that gold has posted a substantial rebound in around a fortnight or so of trading.
Recent buying in gold, and maybe bonds, can be attributed questions about the pace of interest-rate hikes from the US Fed in 2017. Trump also has influenced trading in the dollar by saying the currency become too strong.
