Gold prices fluctuated between gains and losses on Friday, as the inauguration of Donald Trump highlighted uncertainty about the path of USA policy in the coming weeks.
"We are moderately bullish on the dollar but we are not looking for as much appreciation as we have seen in the last few years. maybe a 3 percent rise in the DXY this year". It has made session high at 1.3293 and lows at 1.3081 levels. "It must discard any illusions and make full preparations for any offensive move by the Trump government", the newspaper said in an editorial published on December 23rd. "And it's killing us".
Trump had publicly inveighed against a strong currency before.
Futures also got a lift after Federal Reserve Chair Janet Yellen backed her stance for gradual interest rate increases on Thursday.
As of yet, there hasn't been any flight from the dollar or USA stocks.
The currency tumbled Tuesday following Trump's comments, which came days before he takes the oath of office on Friday. How high could rates go to support all that borrowing? The dollar index, which measures the greenback's value relative to a basket of foreign currencies, reached a 14-year high at one point. Because gold companies have the flexibility to deploy capital, and can even return that capital via share buybacks and dividends to shareholders, individual gold stocks are probably a smarter way to play a bull market in gold than owning physical gold during Trump's presidency.More news: Serena into Australian Open second round
On the longer-term outlook for the United States economy, Yellen said its usual rate of growth would now be "significantly lower than the post-World War II average".
Platinum slipped 0.5 percent to $954.40 an ounce after touching a low of $943.75 in the previous session, its worst since January 5. "I think the answer to those questions is "no", the analyst said".
RBC Capital Markets in a note on Friday cited research calling for another 25 percent boost for the dollar if US corporate tax rates are cut to 20 percent, but said some of that may already be in priced in and the rest will take time. It makes sense that traders would like to make a little bit of money on the way up now that gold is back above $1,200 per ounce. In the short term, the prospect of a trade war may unsettle markets and lead to flight to the safest asset in the world - dollar-denominated Treasury bonds, bidding them up. "He's not going to be able to change all of America and all global markets all the time just by Twitter".
While there is considerable unclarity about the exact shape of the incoming administration's policies, there is growing concern about the direction in which it is heading. However, the USA is party to global agreements against unilateral currency manipulation.
But the decline was modest as Trump did not touch on specific economic or trade policies. "The more "Presidential" this speech comes across, the better the outcome for markets". "They talk much more about free trade than they actually practice", he said.
Since becoming the President elect, Mr.Trump has used whatever strong arm tactics he could to persuade some big name manufacturers, such as United Technologies (maker of Carrier air conditioners), Fiat Chrysler, General Motors, Ford Motor, Toyota Motor, to re-direct their future capital spending, away from Mexico and towards the U.S. instead. There was more than an element of that rhetoric in Ross' remarks. "We would like to have our trading partners also practice free trade and do it in a more balanced manner than has been done at present", Ross told a Senate hearing on his confirmation.