Gold makes gains over the weekend
Up until the final spurt on Friday, it appeared that investors were waiting to see the effects of December’s expected interest rate hike in the US and the uncertain future of US financial politics. The price of gold was largely stagnant at around 1,280 $/oz for the past trading week. Gold reached an interim high of 1,293 $/oz on Tuesday in line with a weak US dollar, and then initially lost in value again. The news on Wednesday that Trump’s 2016 election campaign may have been under Russian influence lent little support to the price, and gold did not increase significantly in value until Friday, ending the trading week at 1,294 $/oz. Main driver was the uncertainty about the progress of Trump’s US tax reform. The US President’s planned tax reform, which aims to lower corporate tax from 35 to 20 percent, has served as a buying incentive. The House of Representatives has already approved the plan and now voting can begin in the Senate—although there is resistance within Trump’s own ranks there. A decision on the plan could be made in the coming trading week. Opponents of the reform say that this transformation will only benefit the wealthy sections of society and corporations.
As we reported previously, global demand for gold is at an 8-year low. ETF stocks also remain considerably below the previous year’s level, although they have been able to make gains in every quarter of 2017 so far. Investors continue to use gold in order to hedge against risks, although geopolitical tensions, such as the North Korean conflict, have receded into the background somewhat in recent weeks, and investors have, overall, focused more on the stock markets.
On the charts, there is tension due to gold’s current battle for the 100-day moving average at 1,280 $/oz. If it is significantly surpassed, this would be seen as a clear signal to buy.