Gold Hits Session Highs As Trump Provides No New Info On Economic PoliciesBy Neils Christensen of Kitco News
Wednesday January 11, 2017 13:00
Editor's Note: The article was updated to reflect a new surge in gold prices and with comments from RBC's George Gero.
(Kitco News) - Gold and financial markets saw strong volatility as President-elect Donald Trump held his first press conference since July and his first since winning the November election.
According to some analysts, the U.S. dollar, and equities sold off, supporting gold prices as Trump provided no new details on his economic and fiscal policies. Near the start of Trump’s press conference, gold futures rallied nearly $10 as result of falling U.S. 10-year yields and a weaker U.S. dollar and equities.
Since wrapping up the press conference, gold has managed to hold on to some of its recent gains; February gold futures last traded at $1,187.50 an ounce, up 0.16% on the day.
“I think markets were really wanting information on what the economy is going to look like in 2017 and they didn’t get that,” said Phillip Streible, senior market analyst at RJO Futures. “Without a clear idea on economic growth, I think equities will continue to suffer, which is why I am bullish on gold.”
In this environment, Streible said that he could see gold shooting past $1,200 an ounce in the near-term.
George Gero, managing director with RBC Wealth Management, agreed that markets were disappointing in the lack of information regarding the new administration’s potential economic and fiscal policies. He also sees potential for gold to perform well in this environment of unclear government policies.
“With all the known headwinds, gold has been steadily improving,” Gero said. “The fact that there is political uncertainty will mean people will continue to want an asset that is stable and offers some security."
While markets may have been disappointed with Trump’s press conference, Gero added that the media shoulders some of the blame.
“The media is more interested in selling sensational news then covering the economy and interest rates,” he said. “They didn’t ask him any questions on the economy or his policies.”
Most of the questions from the media focused on potential connections between the president-elect and Russia, which Trump denied, calling the reports fake news and disgusting..
Regarding the economy, Trump only provided vague platitudes reiterating that he will be “the best job creator, god has ever created.”
Trump did use the press conference to highlight steps he has taken to remove himself from his business so as to not create any potential conflicts of interest as president.
The Trump Organization will be put into a trust that will be run by Trump’s sons Donald and Eric. While he is president the company will not make any foreign deals and all domestic deals will have to have the approval of from an appointed ethics advisor.