Gold sales heat up in Europe but not in US
new york — Donald Trump’s US presidential victory has spurred safe-haven buying of physical gold in Europe, but traditional bullion holders in the US are standing pat. After all, many of them are optimistic after voting for Trump.
The contrast in reactions to Trump’s surprise victory shows a wide difference in how investors in the two markets evaluate risk. For many outside the US, Trump’s pledge to rewrite the play book on trade and international relations
US precious metals investors view a Trump victory as a good thing Tarek Saab, COO, Texas Precious Metals
prompted defensive gold buying. US investors were more likely to be dumping gold in favor of stocks and bonds.
US precious metals investors “view a Trump victory as a good thing and, therefore, there’s not a tremendous amount of panic,” said Tarek Saab, chief operating officer and co-founder of Texas Precious Metals. “Since the majority of our client base were Trump supporters ... that’s the reason we’ve seen a bit of slowness in the industry.”
Texas Precious Metals’ sales have tapered off around 20 per cent in November from pre-election sales in October, the highest selling month of 2016 so far, Saab said. Gold is a traditional safe haven commodity that people buy in times of uncertainty, what some call a “fear trade”.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, have slid 4.8 per cent since rising the day after the election. That was the biggest eight-day drop since April 2013. Spot gold prices soared nearly five per cent above $1,337 an ounce after the election, but have swooned since then to a 5-1/2-month low near $1,200.
“I feel as though Trump is generally positive for the economy and I am hopeful that a Trump presidency will help reignite our sluggish economics,” said Saab.
November gold sales at Dillon Gage, a large bullion dealer in Dallas, Texas, are also down slightly from October so far. They are, however, up from a year ago after seeing a 50 per cent spike during the election week then falling around 20 per cent the week that followed, according to the company.
Dealers who sell gold coins and bars in Europe, however, have been busy. “Users have now added well over half a tonne since end October (652kg). That already makes November the strongest month for net inflows since December 2012 (702kg) with almost 10 days still to go,” said Adrian Ash, head of research for Bullion Vault in London, referring to the online gold trading platform’s clients.
Gold falls to nine-month low
Gold slid to a nine-month low on Wednesday as a buoyant dollar extended its rally on the back of strong US data that further cemented a case for increasing interest rates.
Spot gold dropped 1.5 per cent to $1,193.91 an ounce by 1406 GMT, its weakest since February 16. US gold futures fell 1.5 per cent to $1,192.80. US durable goods orders rebounded in October and jobless claims remained below a level consistent with a tightening labour market. The data sent the dollar index to a fresh 13-1/2 year high. —