Trump’s First 100 Days And Gold
Sunshine Profits | Apr 28, 2017 01:17AM ET
Saturday will be the 100th day of Trump’s presidency. Were these days positive for the gold market?
Well, that passed quickly. And the world has not collapsed, what a relief! But jokes aside, it’s been an eventful few months since the election, especially for precious metals. As one can see in the chart below, the price of gold gained about 5.6 percent over the first 100 days of Trump’s presidency.
Chart 1: The price of gold between Inauguration Day and April 24.
For sure, the waning expectations of a quick implementation of Trump’s pro-growth agenda and the uncertainty about Trump’s policies were important bullish drivers for gold prices. Indeed, the investors’ interest in gold has grown significantly since Trump’s inauguration. The comments from the new administration about the allegedly too strong U.S. dollar were also supportive for the yellow metal. Not to mention the recent Trump’s actions related to Syria and North Korea. However, gold’s performance shouldn’t be attributed entirely to Trump. Gold has been also sensitive to the Fed’s action and the broad macroeconomic outlook.
What can learn from these 100 days in the context of the gold market? Well, Trump has not fulfilled most of his promises . Surely, he nominated a Supreme Court justice, abandoned the TPP trade agreement and cancelled many of Obama’s regulations. However, he failed to repeal and replace Obamacare. And he actually reversed his stance on many issues – for example, he does not want to call China a ‘currency manipulator’ any longer (at least, until the next tweet). Hence, the key lesson is that Trump is inconsistent and often changes his mind – this is good for gold, as markets do not like surprises and unpredictability. On the other hand, it seems that the POTUS has softened his rhetoric on China and foreign trade, which reduces some uncertainty related to his presidency. And this is bad for the yellow metal. Anyway, perhaps the most important thing is that emotions about Trump’s presidency have been subsidizing, as the investors realize that he will not destroy, nor magically revive the U.S. economy. Hence, if the investors start to take him a little less seriously, the gold trade could become more about macroeconomics rather than politics. Stay tuned!
Get The News You Want
Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our trading alerts.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.