Gold is still getting torched

Photo by Patrick Aventurier/Getty Images

Gold is being treated with disdain again in Asian trade on Friday, continuing the unwind seen since Donald Trump prevailed in the US election.

Many were expecting that gold would soar on a Trump victory given the heightened levels of uncertainty he would bring to the Oval Office.


The spot gold price currently sits at $US1,176.46 an ounce, down 0.57% for the session.

It’s now fallen 12.4% from the high of $US1,337.40 an ounce it struck on November 9, extending the decline from July 7 to nearly 15%.

A shellacking in anyone’s language.

Spot Gold Daily Chart

Chris Weston, chief market strategist at IG Markets in Melbourne, says gold is being hammered for two main reasons.

The US dollar is rallying and it offers no yield.

“Gold has simply just followed the USD, so you might as well have been trading the currency markets,” he says.

“Gold looked like a great investment when we saw an ever increasing world of negative yielding interest rates, but given the level of outstanding bonds with a negative yield has almost halved since Trump was elected, the fact gold has no yield makes it less attractive on a relative basis.”

From the lows of November 9, the US dollar index has risen over 6%. The benchmark US 10-year treasury yield has also risen from 1.716% to 2.417% over the same period.

He adds that as long as US bonds are sold, so too will gold.

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