The Sunday Mail
GOLD has pushed back to trim a sixth weekly loss driven by a more aggressive Federal Reserve, investor enthusiasm about Donald Trump’s policies and sales from exchange-traded funds.
Spot bullion climbed as much as 0,7 percent to US$1,136.26 an ounce and was at US$1,131.97 at 9:34 a.m., according to Bloomberg generic pricing.
The gain came after the precious metal’s 14-day relative-strength held below 30 for six sessions through Thursday, signalling to some analysts it’s oversold.
“Gold has gotten smoked,” Troy Gayeski, a senior portfolio manager at SkyBridge Capital, said in an e-mail, referring to the run of recent declines.
Gayeski, who warned in July that bullion’s rally was at risk said gold’s drop this quarter came on the “improvement in the US economy and firming inflation that was fairly apparent prior to the election, which in turn raised the probability of future Fed hikes and a potentially stronger dollar.”
Bottom of Form
Gold’s gains this year have been chopped back, with the commodity nearing bear-market territory, after the Fed tightened monetary policy last Wednesday for the first time in a year and signaled the possibility of three more hikes in 2017.
Emboldened by speculation about President-elect Trump’s agenda, investors have seen returns in other asset classes with US equities at records and Treasury yields rising.
“The Trump victory has delivered the sum of all fears to gold investors due to the combination of anticipated pro-growth tax reform, a rollback of the hyper-regulation of the Obama administration, and the potential for fiscal stimulus,” Gayeski said.
As of Thursday’s close, gold had retreated 17 percent from July’s high, nearing the 20 percent loss that’s a common definition of a bear market. Prices dipped to US$1,122.89 on Thursday, the lowest intraday price since February. The rout in prices this quarter has hurt miners’ shares.
On Friday, losses in an index of 16 gold producers tracked by Bloomberg Intelligence, which fell 0,4 percent, were led by Newcrest Mining Ltd., while Randgold Resources Ltd. and Yamana Gold Inc. led gainers. Silver and platinum also rallied in the spot market, while palladium dipped. – Bloomberg.
