Gold is up 1.4% at $1,212 per ounce following a series of comments from the Trump administration that zeroed in on the foreign exchange market.
Early Tuesday, Trump adviser Peter Navarro suggested Germany is taking advantage of the European Union and the United States by using a “grossly undervalued” euro.
A few hours later, President Trump chimed in saying that other countries take advantage of the US by devaluing their currencies, according to Reuters. The precious metal held onto smalls gains ahead of Navarro’s comments and spiked to its best level in a week shortly after his comments crossed the tape. Gold then consolidated near the $1,200 level before seeing another leg up following Trump’s remarks.
So far, gold traders have not responded to a Trump presidency the way many on Wall Street thought they would. In a note to clients sent out in November, HSBC Chief Precious Metals Analyst James Steel wrote:
A Trump win would be decidedly gold-bullish, in our view, given the potential for increased protectionism, higher budget spending and geopolitical risks. Gold prices could jump to USD1,500/oz relatively quickly, and end the year at that level on a Trump win. This could raise our 2016 average price to USD1,300/oz. For 2017, gold could rise further to USD1,575/oz by year end with an average of USD1,410/oz.
On the evening of Trump’s election win, gold spiked about $60 an ounce to more $1,334, putting in its best print since late September. However, it quickly reversed into the red and pushed lower into the end of the year. The precious metal bottomed near $1,122 per ounce just before the New Year and has worked its way higher into early 2017. Gold is up 5.7% so far this year.
