Gold Price Shoots Higher As Trump Offers No Clarity
The US dollar fell hard whilst gold prices shot higher as Donald Trump began his pre-presidential speech, which provided little clarity on future financial policies. The price of gold began the US session to the downside, hitting a low of $1177 before reversing strongly heading towards $1200.
It seems the speech by the soon-to-be US president left questions to be answered on hot topics such as tax cuts and infrastructure spending.
Gold reacted strongly to this uncertainty and has now reached the underside of the support levels from early 2016. You can see clearly on the chart below where we are at the right now, this area could possibly hold a little bit resistance for the price of gold in the short term. However, further uncertainty that arises as the new US president enters the White House may see gold break past this level and settle in a range up towards $1300.
Gold prices are sensitive to changes in US interest rates, so maybe the outlook on forthcoming changes could become clearer as Janet Yellen appears at a webcast town hall meeting today. Traders will be looking for clues as to whether the central banks projection of three rate cuts during 2017 will hold firm, with many commentators suggesting there could be less.
Whilst the US dollar has been on a strong rally since early November after the shock victory from Donald Trump, recent weeks have seen the currency consolidate against most other majors, even falling against the Japanese Yen. Continued weakness in the dollar coupled with uncertainties for the stock markets could propel gold back towards the 2016 highs.
It’s quite possible the markets are waiting for Donald Trump’s inauguration on 20 January. It will be interesting to see how all markets react once the new president takes his seat.
Pete Southern is an active trader, chartist and writer for market blogs. He is currently technical analysis contributor and admin at this here blog.
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