It would appear that as President Elect Donald Trump did not press the nuclear button / start World War III on Tuesday November 9 2016, gold is something of a sell…
Apparently one of the best ways to make money is to have a view, and to stick to it. Unfortunately, this also seems to be one of the best ways to lose money as well. From the Brexit experience, and the ERM Exit before it, the rule for the stock market was that the surprise would cause an initial dip / crash to buy into.
This worked well, especially in terms of the initial sell on Brexit and on Trump. But for gold we simply saw a spike higher on Brexit, with this continuing more or less for the following three months. But this time around, while we were treated to a sharp spike for gold overnight on the 8th – 9th November, since then there has first been a pullback to pre-election levels, and now an acceleration to the downside. In fact, as I have written this article Gold has fallen some $15.
Of course, it is normally the case that a strong US Dollar will weaken the yellow metal. The issue though in this instance is that having wrong-footed traders with the initial spike on the Clinton defeat, we shall see a full-blooded rout. The risk was always that the loss of the $1,250 zone would lead this market straight down to the main $1,200 support area. The question now is whether there could be a rather more sinister end to the year than many might be expecting…