Gold fell more than 1 percent on Thursday after the dollar rose to a 3-1/2 month high against the yen, as markets weighed the election of Donald Trump as U.S. president and how his policies could affect economic growth. Trump's plans call for infrastructure building and massive tax cuts which could increase the U.S. budget deficit and help support gold. His victory has also called into question the expected U.S. interest rate increase in December. But the Republican president-elect has also vowed to boost growth in the U.S. economy which could boost the dollar and in turn hurt gold, which is priced in the U.S. Currency. The Republican sweep of the White House and Congress could break the current gridlock over national policy in a potential boon to the U.S. economy, St. Louis Federal Reserve bank president James Bullard said on Thursday. Bullard said the potential positives from Tuesday's outcome, including the possibility of regulatory reform and a boost to growth through new infrastructure spending. Richmond Fed president Jeffrey Lacker said the case for a rate hike in December is strong. If the next Congress passes a stimulus program, the Federal Reserve should respond with more interest-rate hikes, he said. Gold would be kept under pressure against the background of Fed’s interest rate hike.
Silver was up 0.4 percent at $18.55 an ounce, breaching the range between $18 to $18.50. On technical front, it could found resistance at the 100-day moving average of $19.03 an ounce and support at the 50-day moving average of $18.46 an ounce. In near term, the spread between gold and silver sharply narrowed. But in the medium, gold will lead silver. Investors shall closely watch the short-covering by silver.

 
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