The price of gold turned slightly negative from the sharp gains made earlier on Wednesday, after a conciliatory victory speech from U.S. President-elect Donald Trump also helped the dollar rebound. Gold had surged by nearly 5 percent to a six-week high of $1,337.40 an ounce as it emerged that the Republican nominee had triumphed over Democrat Hillary Clinton in the presidential election, a surprise for markets which prompted investors to seek refuge in perceived safe-haven assets like gold. But gold's price later fell below $1,280 an ounce as the dollar turned higher, U.S. stocks rose sharply and U.S. Treasury debt yields touched multi-month highs. U.S. December gold futures settled down 0.1 percent at $1,273.50, with volume surging above 785,000 contracts, the highest for the most-active contract on records going back to 1980. It's too early to predict if Trump will enhance or hurt U.S. growth longer term; however, his policies should pressure U.S. real rates lower, while greater policy uncertainty is gold supportive. On the technical front, support can still be found around the 200-day moving average of $1,270 an ounce. We maintain our bearish view on gold. But its losses will be limited.
Spot silver was up 0.2 percent at $18.38 an ounce, having risen to its highest since Oct. 3 at $18.996 an ounce. It remained rangebound within the range between $18 to $18.50, diverging with gold compared with the latter’s downturn. Rising risk appetite provided a floor to silver. The trend, however, is unsustainable. Investors are recommended to short silver if the spread between gold and silver narrowed down.

 
Dealing Room, ICBC Beijing Branch
Cheng Yu

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