Lagos — Gold is up 0.25% in spot trading as it continues to hold above $2,700 per ounce.
Gold’s gains come amid anticipation of Donald Trump’s inauguration as US president later today and the speech he will deliver, which will be the focus of the market. While the tone of the speech will help determine the path Trump will take on various issues.
The gains also come despite rising Treasury yields, which in turn comes with concerns about the future path of inflation and interest rates. However, uncertainty about the future of public finances with the expected shift in tax and deficit policies is likely to be a supportive factor for gold as a safe haven.
While the new president is expected to deliver an “optimistic” speech, according to The Wall Street Journal, citing its sources. If Trump’s speech manages to ease concerns about the issues that are worrying the market, this could renew pressure on gold, which will stand up to higher Treasury yields.
The market will also be watching the tone of the speech regarding trade policy with China and even US allies. Trump’s assertion of his aggressive trade approach towards economies struggling to regain growth, such as China and the European Union, could deepen uncertainty about the future of the global economy as trade wars reignite.
In China, too, whose economy is bracing for weak domestic demand, the People’s Bank of China left key borrowing rates unchanged. While the lack of a cut was expected, it keeps uncertainty high about how the economy will cope with the hit to exports that are being relied upon to support growth targets.
*Samer Hasn, Senior Market Analyst at XS.com
