Gold price rises on softer dollar as market awaits more US data
"The main thing helping gold right now is market expectations that the Fed may actually decide to cut earlier than September," an analyst said.
Gold miners big and small were soaring Wednesday as investors flocked to safe-haven assets in reaction to a shock victory for Republican Donald Trump in the US presidential election, which boosted the price of precious metals.
SPDR Gold Trust (GLD), an ETF that tracks the price of gold bullion, rose 0.8% to 122.63 in the stock market, off intraday highs for 124.35.
Gold is often viewed as the ultimate haven play. It usually climbs when the dollar falls and during uncertain market events.
Canada’s Barrick (TSX, NYSE:ABX), the world’s No.1 gold producer by output, was up almost 5% in Toronto and 3% in New York this morning. Fellow Canadian miner Goldcorp (TSX:G)(NYSE:GG) was soaring almost 7% in Toronto and 6% in in the NYSE, while rivals Kinross (TSX:K)(NYSE:KGC), Eldorado Gold (TSX:ELD)(NYSE:EGO), Newmont Mining (NYSE:NEM) and NovaGold (TSX:NG) they all follow suit, with average gains over 4% each.
New York-trade shares for African miners Harmony Gold (NYSE:HMY), Sibanye Gold (NYSE:SBGL) and Gold Fields (NYSE:GFI) were performing even better than they did in the Johannesburg Stock Exchange and were up 6.05%, 7.67% and 5.9% respectively at 10:50AM EST.
After a sharp surge overnight, gold prices fell back below $1,300. December gold last traded at $1,287.5 an ounce, up 1% on the day, having peaked at $1,338.30 earlier.
In a note to investors, the head of metals at Thomson Reuters GFMS, Rhona O’Connell, said gold’s reaction to Trump triumph has been a relatively muted when compared to the aftermath of the Brexit vote.
“The fact that gold has not broken through that important technical level and has already attracted some producer selling means that the markets are sitting on their hands and this shouldn’t really come as too much of a surprise,” Rhona O’Connell, wrote.
“It’s important to remember that headline grabbing policies are likely to be tempered by advisors and on that basis I would expect gold to mark time for now,” she noted.
“Interesting to note that the base metals, generally, are also stronger this morning (and not just in dollar terms), also reflecting the fact that some uncertainty has been taken out,” O’Connell said.
Gold is usually seen as a safe haven for investors during uncertain market events, so while the price has settled overnight, it appears investors prefer to be safe rather than sorry.
Not over
The price surge may not be over, according to analysts from BMI Research.
“The victory of the Republicans at the November 8th US Presidential and Congress elections will buoy gold prices in the coming days while dragging on other commodities,” BMI analysts said in a note Wednesday. “Looking longer term, this poses upside risks to our already bullish gold price forecast in 2017, but it does not materially change our views for other commodities.”
Odds of a Federal Reserve rate hike next month had fallen, weakening the dollar. But after a brief period overnight where December Fed rate hike chances dropped below 50%, investors now see a 71.5% chance.
3 Comments
Witte Boer
The analysts promised us a $200/oz jump if DT was to win the election. Looks like a bit of a flat fart to me…
Rick
“SPDR Gold Trust (GLD), an ETF that tracks the price of gold bullion, rose 0.8% to 122.63 in the stock market, off intraday highs for 124.35.”
I’ve been trying to do my due diligence into the SPDR Gold Trust (GLD). Anyone know why there is a clause in the GLD prospectus that states GLD has no right to audit subcustodial gold holdings? Why would the organizations behind GLD forfeit this right and create such a glaring audit loophole? I have not heard a single good reason for the existence of this loophole thus far. It also doesn’t help that GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. There are a number of other red flags as well from what I’m reading:
“Did anyone try calling the GLD hotline at 866▪320▪4053 in search of numerical details on GLD’s insurance? The prospectus vaguely states “The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody.” When I asked about how much of the gold was insured, the representative proceeded to act as if he didn’t know and said they were just the “marketing agent” for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.”
“I remember there was a well documented visit by CNBC’s Bob Pisani to GLD’s gold vault. This visit was organized by GLD’s management to prove the existence of GLD’s gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this “GLD” bar was actually owned by ETF Securities.”
Tailgunner
It’s 2:00pm 11-10-16 and all nine of my minor stocks are way down and still dropping! If you own gold ETF’s, you don’t own anything. Barrick has dropped 7% since this morning.