Gold price makes stab at $1,200
Gold advanced to a six-week high on Wednesday after Donald Trump's first press conference as US president-elect sparked a sell-off in the US dollar.
Gold for delivery in February, the most active contract on the Comex market in New York, hit a high of $1,198.50 an ounce in early afternoon trade, up over 1% from Tuesday's close and the highest on an intra-day basis since November 28.
Gold bears have been making big bets that a Trump administration will lead to strong US economic expansion, higher interest rates and a stronger dollar
Gold is up more than $70 an ounce since hitting post-US election lows mid-December, but remains down some $140 from an initial but brief surge on election night as results showed a likely victory for Trump.
A pillar of president-elect Trump's economic plan is fiscal stimulus in the form of tax cuts and $500 billion-plus of infrastructure spending.
Gold bears have been making big bets that a Trump administration will lead to strong US economic expansion, higher interest rates and a stronger dollar. Higher interest rates boosts the value of the dollar and makes gold less attractive as an investment because the metal is not yield-producing and investors have to rely on price appreciation for returns.
But Trump offered nothing new on Wednesday and while the dollar was moving higher ahead of the presser, the currency fell soon after reports MarketWatch:
“Investors were hoping for specific answers pertaining fiscal policies and tax reforms, but Trump did not address those. Instead it was more focused on bashing China and Mexico,” said Steven Englander, global head of G-10 currency strategy at Citi.
The dollar measured against a basket of the currencies of major US trading partners surged following the elections hitting a 14-year high. The greenback's all-time peak of 164.7 was reached in February 1985. That coincided with a bottom in the price of gold of $284.25 an ounce.