Gold broke through the $1,300 mark today on the back of the Fed’s interest rate decision, and also on news that Donald Trump took the lead in the polls for the first time to become president of the United States.
At 6.47 (GMT) gold was trading at $1,302 up from $1,287 in yesterday’s trading.
The US Federal Reserve today decided to keep rates on hold at 0.5 percent which lent some support to gold but it was the unexpected news that Trump now has a one-point lead in a poll from ABC News and the Washington Post that really put a rocket under the gold price.
“Donald Trump’s improved standing in the polls tends to neutralize this week’s Fed meeting as a market event,” said Ric Spooner, chief market analyst at CMC Markets, in emailed commentary. “Even if the Fed does signal an inclination to lift rates in December, markets will take the view that this is unlikely if a Trump victory leads to uncertainty and a surge in financial market volatility.”
This is now the 2nd highly unexpected event this year to happen after “Brexit” when Britain decided to leave the European union and investors feel a sense of security by snapping up the precious metal,
“Having already been caught off side by Brexit earlier this year, the increase in U.S. political uncertainty has traders fleeing into gold as a safe haven for capital,” Colin Cieszynski, chief market strategist at CMC Markets told MarketWatch.
James Butterfill, head of research and investment strategy at ETF Securities noted that an even bigger jump is expected in the gold price if Trumps claims the presidency, as the markets have not had to deal with such uncertainty for a very long time.
"Gold is seen as a hedge against political uncertainty, and President Trump would bring more political unpredictability than any president for generations, particularly over the U.S. Federal Reserve’s leadership and monetary policy strategy,"Mr Butterfill he wrote.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 61% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 61% of retail investor accounts lose money when trading CFDs with this broker. Before deciding to trade foreign exchange you should consider whether you understand how CFDs work, your investment objectives, your level of experience and readiness of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|