Gold prices firmed on Tuesday, reaching their highest level since November 30 on general nervousness ahead of the first press conference by President-elect Donald Trump on Wednesday. The market was also underpinned by a weaker U.S. Dollar and uncertainty over the U.K.’s exit from the European Union.
Technically, the main trend turned up on the daily chart for the first time since November 10 when buyers took out the December 5 top at $1190.20.
Buyers have been supporting gold prices since the Fed raised interest rates on December 14. In move very similar to the price action at this time last year, the rally is starting to gain traction with speculative buying and short-covering providing the underlying strength.
In his acceptance speech shortly after the election in early November, Trump said he would make America great again through aggressive fiscal spending. At some points during his campaign, he said he would also cut taxes and loosen banking regulations. These statements fueled a surge in U.S. Treasury yields, making the U.S. Dollar a more attractive investment while sending gold prices plunging.
Investors are going into Trump’s press conference on Wednesday, looking for more clues on his spending plans. This is causing the uncertainty supporting the gold market because there are some doubts in his ability to govern the country and deliver what he promised.
Crude oil prices remained under pressure on Tuesday in a continuation of Monday’s sell-off as investors continued to express doubts over compliance with OPEC’s plan to cut production in an effort to trim excess supply and stabilize prices.
There is evidence that Saudi Arabia is reducing production as pledged, but just 10 days into the deal, it is unclear whether the major producers in the cartel are following the Saudi’s example. Moves by Iraq to raise exports, for example, are raising issues as to whether they are actually on-board with the other OPEC and non-OPEC countries who pledged to reduce output.
In economic news, the NFIB’s small business survey results for December showed sentiment rising to 105.8 from 98.4. This number also bested the 99.6 estimate. Wholesale inventories came in above estimates at 1 percent. The job openings and labor turnover survey also known as JOLTS came in at 5.5 million, above the previous 5.45 million, but below the 5.59 million estimate. The report also showed the number of people quitting their jobs hit a record high, which is an indication of confidence in the economy.