The gold price is under pressure today on the back of a stronger US dollar but some analysts
believe this is about to change as the greenback runs out of steam.
At 2.00pm (GMT) gold was trading at $1.190 down from $1.197 in yesterday’s trading.
A stronger U.S. dollar makes commodities more expensive for holders of other currencies as they
are priced in US dollars therefore reducing demand, while higher Treasury yields mean
U.S. bonds are cheaper for traders looking for other investments apart from gold
"The dollar is a little bit stronger this morning, yields are up a bit and that's why gold is below
1,200," said Julius Baer analyst Carsten Menke. "But overall the appreciation of the dollar seems
to have stalled, we could see a reversal."
Earlier this week the gold price jumped to a 2 month high on the back of a weaker US dollar and
uncertainty surrounding the policies of US president Donald Trump who noted earlier in the
week that he would like to see a weaker US dollar to make the American economy more
"Trump’s incoming administration is among the least experienced in public service of any in
history and this will lead to a steep learning curve for several departments. While it is generally
expected that the Republican-controlled Senate and House of Representatives will be supportive
of Trump’s policies, collaboration is far from certain as there has been an inordinate amount of
pushback from senior members of the Republican Party on various fronts” noted Cantor
Fitzgerald analyst Rob Chang.
"In addition, the unconventional and often erratic behavior of Trump may also be a constant
wildcard. We point to his interesting and frequent use of twitter as a prime example of this as a
single tweet can influence markets”
“These issues point to a great degree of political and policy uncertainty for the U.S., which will
make the safe haven feature of gold very attractive." He added.
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