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Gold, Silver Rally on Donald Trump Uncertainty

January 23, 2017 at 18:14 by Andrew Moran

The Donald Trump era has begun, and that appears to be benefiting gold and silver. The precious metals are rallying on Monday as the US president starts his first full week as the new Commander in Chief. Gold and silver are also surging to kick off the trading week due to the US dollar and bond market being impacted by the uncertainty surrounding the Trump administration.

February gold futures climbed $11.00, or 0.91%, to $1,215.90 per ounce at 16:48 GMT on Monday. Gold prices are trading at their highest levels since November 6. This comes as the yellow metal posted its fourth consecutive weekly gain last week with a 0.67% jump.

Silver is also recording some gains. February silver futures increased $0.13, or 0.81%, to $17.17 an ounce. Silver reported a weekly gain of 1.8% last week.

Despite being in the early days of a Trump presidency, investors feel relatively uneasy regarding his economic policies. These nerves prompted traders to park their money into safer assets, which sent the US dollar and bond yields lower. The weaker greenback and falling bond yields are helping gold and silver make steady gains.

Experts are warning that this trend may not last long. Trump plans to amplify government spending, impose tax cuts, and establish deregulation efforts “by 75% or more,” which would all be measures to boost the US dollar and stocks. A higher dollar is bad news for commodities like gold and silver because it makes it more expensive for foreign investors to purchase.

The year will certainly generate much uncertainty and perhaps chaos, something that would serve as a boon for gold. Over the next few months, Europe will hold several elections, the Federal Reserve may or may not move ahead with moves to interest rates, and protectionist measures may be instituted by a Trump-led America. If Trump is able to muster significant economic growth then it would likely boost higher bond yields, a move that would diminish demand for the yellow metal.

Year-to-date, gold has surged more than 6%, and many gold bugs are optimistic for 2017. With aggressive infrastructure spending, expanding budget deficits, and a weak dollar policy, precious metals could make massive strides in the coming months.

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