Gold price under pressure; better risk-on sentiment surprises

Gold was under pressure on the morning of Friday November 11 in London from improved risk appetite that made safe-haven assets less desirable.

The spot gold price was recently quoted at $1,253.85/1,254.15 per oz, a drop of $6.75 on Thursday’s close, having earlier fallen to a three-and-a-half-week low of $1,251.15 per oz.

“Observers of the gold market must be rubbing their eyes in bewilderment. Donald Trump is elected the new US president and the reaction is euphoric celebration on the financial markets, as can be seen for example from the sharp rise in stock markets and base metal prices,” Commerzbank said in a note.

“We feel that the slide in the gold price is exaggerated given that Trump’s election will probably increase rather than diminish the uncertainties,” the bank added.

A stronger dollar and the fact that a rise in US interest rates in December is increasingly being priced in again are also weighing on the precious metal this morning, market participants noted.

According to the CME Group’s FedWatch tool, the probability of the Federal Reserve lifting rates next month has returned to 80%. It had plunged to below 50% in the immediate wake of Trump’s election.

“Perhaps the conciliatory speeches from Mr. Trump, Mrs. Clinton and Mr. Obama played a part in calming investor nerves, but the immediate reaction was not a Brexit-style event for gold,” Citi’s analyst Nell Agate said.

“The bullish short-term bullion view… will probably not materialize, especially on a smooth transition of power and given the current strong US dollar trend. The medium-term gold outlook might even be a bit negative for prices on a Trump presidency,” she added.

In the other precious metals, the spot silver price was little changed at $18.635/18.655 per oz. Platinum at $970/975 per oz was also unchanged while palladium at $682/687 per oz was down $7.

(Editing by Mark Shaw)

 

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