No fireworks in gold today, it's a buy on dips for now

Gold steady as markets take a breather after Trump shock

The price of gold turned slightly negative from the sharp gains made earlier on Wednesday, after a conciliatory victory speech from US President-elect Donald Trump. 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

GFMS Thomson Reuters in its analysis on gold post Trump said, "don't expect fireworks, it's a buy in dip market now."

Even in India on MCX,  prices fell sharply. On Thursday,  gold opened above Rs 30,000 per 10 gram  but soon fell by nearly 4 percent from yesterday's  peak. . It was trading above after Rs.30014 after an hours trading but with very high volumes. 

The Mexican peso plummeted by over 13%. Mexico is the world’s largest producer of silver with 21% of world mine production. Mexican currency movements was also tracked by markets as an indicator of what markets think about Trump. It's fall was following Trump victory.

Gold also failed at an important technical level, stopping at the downtrend line that dates back to the record highs of 2011.

The Reuters  report notes,  "Certainly President-elect Trump appeared to adopt a more conciliatory tone in his initial remarks than in the oh-so-combative Presidential election campaign, but the markets will need more guidance before they can settle. In the short term, therefore, further volatility and risk-off activity could easily prompt further gains in the gold price, while for the longer term the picture is more hazy, but points overall to further bullish action. This though is more likely to be on the basis of bargain hunting into dips rather than a headlong pursuit of higher prices."

 "Given that Donald trump hardly has any policy details to back up his general proposals, it is not clear yet what effects

his presidency will have on the various markets," INTL FCStone analyst Edward Meir said in a note.  Until Trump's cabinet starts to take shape and as he expands on his ideas, gold markets will re-focus towards the course of

U.S. rate hikes, gyrations in the dollar and the direction of the U.S. stock market, he added. 

With inputs from Reuters