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Gold Prices Surge After Donald Trump’s ‘Too Strong’ Remarks

January 17, 2017 at 18:09 by Andrew Moran

Gold prices are surging on Tuesday after US President-Elect Donald Trump said the dollar is “too strong,” sending the greenback lower. The yellow metal has been trading quite well in 2017 due to the numerous uncertainties in 2017 surrounding global affairs.

February gold futures climbed $16.20, or 1.35%, to $1,212.40 per ounce at 16:40 GMT on Tuesday. Gold had pared some of its gains earlier in the trading session when it topped $1,215. Gold prices have not traded at these levels since the middle of November. Year-to-date, gold is up roughly 6%.

Silver is also joining in the rally. February silver futures rose $0.36, or 2.15%, to $17.12 an ounce. This comes as silver posted a 2% weekly gain last week.

Speaking in an interview with The Wall Street Journal, Trump explained that the US dollar is “too strong,” and its strength against the Chinese yuan renminbi is “killing us.” He added that the strength of the greenback is preventing US companies from competing with Chinese companies. Trump also predicted that more countries would leave the European Union and referred to NATO as “obsolete.” These remarks led to the US dollar, which recently hit a 14-year high, tumbling.

Gold is also benefiting from the various unknowns pertaining to the incoming Trump administration’s plans for the US economy. Ahead of the January 20 inauguration, the Trump campaign has called for tax cuts, an aggressive infrastructure spending project, and further protectionist policies, like a border tax.

Meanwhile, British Prime Minister Theresa May delivered a speech on Tuesday in which she further cemented the nation’s plan to leave the EU. She explained that the UK does not plan to be a partial member of the EU and will make a definitive exit from the trading bloc.

No deal for Britain is better than a bad deal for Britain.

In addition to the investor fears over Brexit and Trump, there are still concerns regarding the upcoming elections in France, Germany, and The Netherlands. With the anti-establishment sentiment maintaining momentum in parts of Europe, there could be heightened volatility in the global financial markets, which is a boon for precious metals.

When international affairs seem bumpy, traders dive into safe haven assets like gold and silver.

If you have any questions and comments on the commodities today, use the form below to reply.

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