Gold climbs to five-week high as markets gear up for Trump presidency

NEW YORK/LONDON — Gold rose to a five-week high on Monday as markets reassessed the outlook for the US economy after Donald Trump is inaugurated as president later this month, taking support from the falling dollar and lower US Treasury yields.

Spot gold was up 0.90% at $1,183.60 an ounce by 3:17 p.m. EST (2017 GMT) after touching $1,185.80, the highest since Dec. 5. US gold futures for February delivery settled up 1% at $1,184.90.

The metal posted its biggest weekly increase in two months last week.

This came after it slid more than 12% in the last quarter as Trump’s election victory boosted expectations that his tax and spending policies would boost the dollar and inflation, prompting more US rate increases.

“A slight pullback in yields and a tiny dip in the dollar and weaker equities are enough to support gold, which is starting to benefit from greater stability in emerging markets,” said James Steel, chief metals analyst for HSBC Securities in New York.

Strong outflows from goldbacked exchange- traded funds have also lessened of late, while seasonal buying in the big Asian gold markets, where India is deep into wedding season and China is approaching the Lunar New Year, has been strong.

“There is an element of people taking a step back from expectations that were formed shortly after the US elections,” UBS Analyst Joni Teves said.

“People are now paring back those expectations until we get strong evidence of an acceleration in US growth, or further guidance from the new administration on what their plans are, and whether they will be able to deliver anything close to what people had been pricing in.”

Hedge funds and money managers cut their net long position in COMEX gold contracts for the eighth straight week in the week to Jan. 3, data showed late on Friday.

On Monday, Boston Federal Reserve President Eric Rosengren called for the US central bank to step up its pace of interest rate increases, while Atlanta Fed President Dennis Lockhart said the possibility of a fiscal boost under Mr. Trump has shifted economic risks to the upside.

Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the greenback, in which it is priced.

Among other precious metals, spot platinum rose as much as 1.60% to $981.90 an ounce, a twomonth high and near the 200-day moving average, while palladium rose 1.60% to a 5-week high at $768.10. Silver was up 0.80% at $16.61. —