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Gold price fights back – touches $1,200

Furnace operators at Glencore’s Kazakhstan precious metals refinery. Image: VisMedia

Gold was attempting a comeback of sorts in Asian trading on Monday despite relentless selling by physically-backed gold ETF investors since Donald Trump’s victory in US presidential elections.

Gold for delivery in February reached a session high of $1,200.00 an ounce, up nearly $20 or 1.6% an ounce from Friday’s closing price on the Comex market in New York. Gold is still down 10% or $140 an ounce after an initial surge following Trump’s win. On Friday gold fell to its lowest level since February.

Gold price fights back towards $1,200

Source: SPDR Gold Shares

Gold bears are 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 and a stronger dollar.

These are all negatives for the gold price and hedge funds, institutions and retail investors have been dumping gold as a result.

Since the election investors in top physical gold-backed exchange traded fund – SPDR Gold Shares (NYSEARCA: GLD) – have redeemed a net 64.7 tonnes (buying on the Wednesday after the election, but offloading 70 tonnes since then).

GLD, which dwarfs other physically-backed gold ETFs with a more than 45% global share, now holds 885.6 tonnes or just over 28.5 million ounces; worth $33.7 billion on Friday. That’s down $5.4 billion since the surprise victory of the billionaire property tycoon.

On August 22, 2011 when gold was hitting record highs above $1,900 an ounce GLD became the largest ETF in the world briefly surpassing the venerable SPDR S&P 500 trust at a net asset value of $77.5 billion. Gold holdings in the trust would peak more than a year later in December 2012 at 1,353 tonnes or 43.5 million ounces.