The price of gold has been very volatile these past several days, beginning with the night of the election all the way to today. This increased volatility, according to analysts, will continue to be the highlight of the market for weeks to come, especially with President-elect Trump’s spending plans.
Gold is usually among the most “stubborn” commodities on the market, which is why there has been a lot of concern surrounding the future of gold’s price. If the past few days are any indication, the market is looking at a relatively good period ahead.
A Jump After the Election
The price of gold jumped by almost 5% when Donald Trump was announced to be the elected President of the United States. It was an announcement that shocked a lot of people – including some of the most experienced traders on the market.
The sudden jump to a 6-week high of $1,337.40 per ounce was fueled by none other than fear. People still see gold as the most solid commodity in terms of value, thus a lot of worried investors entered the market to balance their portfolio, leading to the precious metal’s sudden price increase.
Once the craze was over, however, gold quickly went down by 0.19% and the price of gold settled back to below $1,300 per ounce. According to the leading experts at Goldco Precious Metals, the market had simply finished processing the election results and the U.S. dollar was actually moving positively.
A Change in Tone
According to Jonathan Butler, an analyst for Mitsubishi, the market calmed down upon hearing Trump’s victory speech. There was no rhetoric; none of the negative tone we heard repeatedly during Mr. Trump’s campaign appearances. It was as if he transformed into a different man overnight.
That said, analysts and experts are still anticipating an increase in inflation, especially considering Donald Trump’s spending plans and the other moves he will make once he is in office.
“The Trump win is still essentially bullish for gold,” he added.
Yet many are not convinced by this change in tone. Many believe it was motivated more by practical, short-term considerations than a genuine change in outlook on the part of the President-elect. The Republicans are also dominating the Senate, leaving little room for resistance from the Democrats once Trump starts issuing policies and making moves.
Gold Is (Still) Sliding
Experts may be on the mark this time, especially considering the fact that gold is still sliding after the initial retreat following the speech. This continuing decline is a clear signal investors favored the Democratic nominee Hillary Clinton and her policies throughout the campaign. The protests now happening in some of the largest cities across the United States are not helping either.
The market needs the elected President to induce confidence. For now, that is not happening. We still have a long way to go until Trump actually sits in office and we start seeing the direction in which he is taking the country. Until then, expect the price of gold to continue being very volatile in light of market changes and new developments.