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Outlook for gold negative
Published on 14.11.2016 23:03

The gold price dived for a 3rd straight day today as investors began to wonder what ever happened to the predicted price surge in the unlikely event that Trump would win the US presidential elections.

Analysts were predicting that gold would jump as high as $1,500 an ounce if Trump took the white house, but were left scratching their heads after gold initially jumped on Trumps victory but then made an about turn to trade near the $1,200 mark in today’s trading.

Some are now speculating that Trumps promise to spend around 1 trillion dollars on infrastructure  may cause a spike in inflation which will force the US Federal Reserve to lift interest rates quicker than expected, causing the US dollar to rise which is negative for Gold.

"People seem to have unwound their Trump-risk and are now talking more about 'Trumpflation'," Jeffrey Halley, senior market analyst at OANDA, said.

"That would push up borrowing rates and yields in the States." he added.

David Seaburg, head of sales trading at Cowen & Co noted there may be a few bounces in the gold price here and there, but the risk is not worth it, and traders who are long on gold should unload their positions.

"I look at gold and say, from a trade, near term, maybe you get a little bounce. Stay away from it. Rates are going higher. We are clearly in a risk-on environment right now. We're seeing that rotation occur," he said.

The material published in on this page is produced by the FIBO group companies, and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Andrew Masters

Analyst

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