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Gold Tops $1,200 After Trump Presser

January 12th, 2017 by

The precious metals are showing solid gains across the board this morning as Wall St is experiencing its worst open so far in 2017. Meanwhile, gold prices, which topped out at a seven-week high of $1,199.40 after President-elect Donald Trump’s press conference yesterday, gained that extra step and moved as high as $1,206 an ounce overnight. Spot gold in New York this morning is trading nearly $12 an ounce higher (+1%) to $1,203/oz, while spot silver is up 1.1% to $16.89/oz.

Platinum and palladium also continued to gain, adding roughly 0.7% and 0.9%, respectively.

Market Reacts to Media Frenzy

The tensions between the media and the president-elect have only gotten higher since November’s election. In fact, even after the official tally in the electoral college was confirmed, the combative relationship between Trump and mainstream (read: liberal) journalists has only intensified in its rancor.

Mr. Trump called his first official press conference in six months, since last July, and the mood was palpably tense. Anti-Trump bias in the news media and the buzzword of “fake news” was brought up, as well as a host of other lingering issues: Will Trump divest from his business interests once he takes office? Does he give any credibility to the constant drumbeat about Russian hacking? What of the explosive—and yet wholly unproven—allegations leaked by the intelligence community?

Instead of the details of his stimulus and deregulation plans the markets were so desperate to hear, Trump’s Wednesday press conference focused instead on unsubstantiated allegations that the Trump campaign had coordinated with Russian spies during the election.

Dollar Tumbles, Havens Gain

All in all, the quarrelsome and brief press conference left more questions than answers, and the uncertainty helped safe haven assets like gold and U.S. Treasurys.

tiny dollar

In what some market analysts are calling an unwinding of the “Trump Trade” or, with tongue-in-cheek, the “Trump Dump,” the DXY dollar index fell below 101 in early trading this morning, while bond prices gained. This means investors showed greater demand for the government bonds, sending yields lower. The 10-year T-note yield fell to its lowest since late November, at 2.33%.

The weaker dollar certainly helped the precious metals, but also generated greater interest in “paper gold” securities. The popular Gold Miners ETF (GDX) and 3x leveraged gold miners ETF (NUGT) were the two highest-volume shares during the first hour of trading in New York on Thursday morning.

U.S. stocks did not respond strongly to this morning’s report that jobless claims rose by 10,000 last week, to 247,000 new claims, but still was below analysts’ expectations (and the important 300,000 mark). U.S. indices were each about 0.8% in the red by 11:15 am EST, with the Nasdaq falling the farthest.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.