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Trump victory prompts gold to breach $1,300/oz

The World Gold Council has today released a market update following this morning’s news that Donald Trump has become the 45th President of the United States.

Key takeaways from the report are as follows:

  • Financial markets have reacted sharply. Global equity markets have fallen, market expectations of a December US interest rate hike have been scaled back and the US dollar is down.
  • The gold price, by contrast, has risen to US$1,300/oz from US$1,275 before the results came in. Gold has outperformed other major asset classes and currencies, including other traditional safe‐havens such as the Swiss franc.
  • Gold trading volumes have increased in Asia, but positioning remains light, and gold buying is widely expected to increase as European and US markets open.

Commenting on the news, Natalie Dempster, MD for central banks and public policy at the World Gold Council said: Financial markets have fallen sharply in response to Donald Trump’s election as the 45th President of the United States.

“Equity markets are down notably in Asian and early European trading. Gold has, by contrast, increased, outperforming other assets, including other safe havens. It is currently trading at over US$1,300/oz, compared with US$1,275/oz before the vote counting began.

Dempster added that short term volatility in the wake of this election is “inevitable”, as it “signals a major political and economic change”. Meanwhile gold trading volumes have risen sharply in Asia, and Western markets, which have just opened, will likely see a continuation of that trend.

“We are seeing increasingly fractious politics across the advanced economies, and this trend, combined with uncertainty over the aftermath of years of unconventional monetary policy measures, will firmly underpin investment demand for gold in the coming years,” she added.

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