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Gold, silver prices at 15-week highs as Trump trade unwinds
Gold, silver prices at 15-week highs as Trump trade unwinds
Longest weekly winning streak for silver price in more than a decade
Gold made headway for the fifth day in a row in heavy trade on Friday as the Trump-trade on financial markets begin to unwind, the dollar weakens and interest rates in the US trend lower again.
Gold for delivery in April, the most active contract on the Comex market in New York with nearly 19m ounces traded be early afternoon, was exchanging hands at $1,261.10, bringing its year-to-date gains to 9.5%. Gold is now at it's the highest since November 11, erasing much of its losses since the US presidential election.
Statements yesterday by US Treasury Secretary Steven Mnuchin bolstered arguments made by the gold bulls camp
Gold bears had been making big bets that Trump's plans for fiscal stimulus, including a $500 billion infrastructure spending program, will lead to strong US economic expansion, higher interest rates. A number of prominent hedge fund managers and billionaires running family offices moved aggressively out of gold and into stocks.
Gold bulls pointed to likely inflation arising from deficit spending by a Trump administration, burnishing gold status as a hedge against inflation and geopolitical uncertainty boosting gold's allure as safe haven asset.
Statements yesterday by US Treasury Secretary Steven Mnuchin bolstered arguments made by the gold bulls camp. Mnuchin said that the Trump administration's proposed tax cuts and other stimulus measures would have a limited impact on the economy this year which sent the dollar lower which usually moves in the opposite direction of gold.
A relatively dovish Federal Reserve statement this week also convinced the bond market that rate hikes this year may be fewer than expected and may only happen later in the year. Because gold is not yield-producing and investors have to rely on price appreciation for returns, the metal has a strong inverse correlation to US government bond yields.
Gold was also buoyed by safe haven buying as uncertainty about upcoming elections in the Netherlands, France and Germany and the impact on the European Union.
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