Heavy buying saw the price of gold jump on Monday reverting to levels last seen before Donald Trump’s election as the dollar weakens and hopes for faster economic growth in the world’s largest economy begin to fade.
Gold for delivery in December, the most active contract on the Comex market in New York with nearly 30m ounces traded by early afternoon, was exchanging hands for $1,317.10 an ounce. That a 1.5% gain from Friday’s close and brings gold’s year-to-date gains to over 14% or $165 an ounce.
Gold is now at its the highest since the beginning of November. The metal touched a high of $1,338 on election night when results showed a likely Trump victory, but the rally in record volumes for the Comex market, soon evaporated and by mid-December gold was languishing at $1,150.
Gold bears had been making big bets that Trump’s plans for fiscal stimulus, including a $500 billion infrastructure spending program, will lead to strong US economic expansion, higher interest rates and a more robust dollar. All bad news for the gold price.
That narrative has now run its course. Global uncertainty and geopolitical worries including North Korea, the wobble on equity markets, the dollar at the cheapest since January 2015 and continued loose monetary policy have seen the return of the safe haven buyer.
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