Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

Gold price rally gains momentum

Gold price rally gains momentum

Gold's comeback in 2017 gathered pace on Thursday with the precious metal jumping to a one-month high, as the US dollar tumbles and uncertainty about what a Trump administration would mean for the US economy mounts.

Gold for delivery in February, the most active contract on the Comex market in New York, hit a high of $1,185.90 an ounce in lunchtime trade, the best level since December 5 in another day of heavy trading. If futures close around these levels it would constitute the metal's best session since September 10.

Gold is up $60 an ounce since hitting post-election lows of $1,124 mid-December, but remains down just over $150 from an initial but brief surge on election night as results showed a likely victory for Trump in the US presidential race.

Gold's latest leg up was spurred by minutes from the US Federal Reserve released yesterday that talked about “considerable uncertainty” about the effect of Trump's fiscal stimulus plans
Gold's latest leg up was spurred by minutes from the US Federal Reserve released yesterday that talked about “considerable uncertainty” about the effect of Trump's fiscal stimulus plans on the world's largest economy and interest rates.

Low interest rates minimizes the opportunity costs of holding gold because the metal provides no yield and therefore the price should appreciated. A low interest rate environment also hurts the value of the dollar which usually move in the opposite direction of the gold price.

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