Trump’s victory has unleashed an unexpected rally for the U.S. Dollar, mainly stimulated by the great possibility of the FED raising the interest rate. As usual, there are no clear announcements of this happening during this December but seems like most investors feel quite sure about it.
On Friday, gold prices went down to 9-1/2 month lows, which is something that is making investors worry. There is a lot of people that backed up their wealth with the precious metal before and after the Brexit, believing that it could result in a sure-shot transaction. It really was delivering profits until the U.S. election, where the real estate mogul won.
After this trading Friday, the third declining week in a row was established. For the gold market, November has represented 7 per cent in losses, which is the worst month for a record-breaking year.
The Thin Line of Profit
Usually, investing in gold isn’t something people do to profit. The precious metal works as a safe haven for wealthy people who don’t want to have their money on currency, which is volatile and gets affected by a plethora of common things of the everyday, when these people buy gold, it is to protect themselves against future uncertainty in the US and global economy.
Nevertheless, there are exceptions about profiting with gold, even during this unfortunate streak for the market. There are investors who dare to bet on gold in order to profit from it. When it works, this investment delivers big earnings.
But the situation is now different. The mindset has changed since Trump’s victory in early November. “Investors are still retreating from gold, though prices falling below $1,200 has promoted some profit-taking,” said Eugen Weinberg, an analyst at Commerzbank, to Reuters.
Maybe the conditions that were set by the outcome of the recent elections are more appropriate for investing in equities. This is the conclusion we get by seeing the performance of this market, where the profit is massive for those investors who got into on the right time.
The FED Is Not Working for Gold
As the correlation between gold and the U.S. Dollar intensifies, is natural to see how the precious metal falls. Analysts like CME FedWatch, which are dedicated to monitoring announcements, indicators, and policies related to the Federal Reserve, aim to an impressive 100 per cent chance of an interest rate hike during this December.
A recent report regarding the U.S. economy prior the elections was key to boost the currency. Now, the FED has to publish a new report on monthly jobs by December 2. This event could be highly negative for the gold market if the domestic indicators result favorable for an interest rate hike.
Despite gold is on a bad luck after a marvelous year that’s about to end, silver is gaining a few points. Investors that are holding the precious metal should be more patient, even while having an imminent interest rate hike in the upcoming weeks. This whole situation could result dramatic for gold but when Trump arrives the White House, the massive changes that will occur will automatically boost gold prices beyond expectation.