Trump remarks help gold prices scale highest levels since November

GOLD prices climbed on Monday to their highest levels in more than seven weeks on buying fueled by political uncertainty after comments by US president-elect Donald Trump on the North Atlantic Treaty Organization (NATO) and China.

Spot gold was up 0.50% at $ 1,202.8 an ounce by 1: 58 p. m. EST (1436 GMT) from an earlier $1,197.26, its highest since Nov. 23. US gold futures were up 0.50% at $1,202.60.

Last week, Mr. Trump said that the “One China” policy on Taiwan was up for negotiation. China retaliated by saying it would “take off the gloves” and act strongly if Mr. Trump continues to provoke once he takes office.

His comments on NATO being obsolete have also made investors nervous.

“There’s the tussle between China and the United States over Taiwan. Trump has been talking to Taiwan, which the Chinese don’t like. His comments on NATO are seen as negative,” said Julius Baer Analyst Carsten Menke.

Investor interest was indicated by the largest physically backed exchange- traded fund, New York’s SPDR Trust, holdings of which rose for the first time since Nov. 9, the day after Mr. Trump’s election victory.

Hedge funds and money managers also raised their net long position in COMEX gold contracts Lower bond yields boost the attraction of gold as a safe haven asset.

Much will depend on Mr. Trump and his plans for the US economy after his inauguration on Friday. But analysts generally expect higher interest rates to strengthen the dollar this year, capping gold’s gains.

“Markets are pricing in three to four rate hikes for 2017. This will likely be the crippling factor for gold, as real yields start to rise, particularly if inflation remains modest,” Standard Chartered analysts said in a note.

“India has attempted to wean the country off gold and demand has been hampered by a raft of government policies clamping down on the parallel economy,” Standard Chartered said.

Spot silver rose 0.20% to $16.76 an ounce.

Platinum prices slipped by 0.50% to $978, while palladium fell 0.70% to $744. —