 "Analysts turn cautious on gold; metals rally")
Analysts are now becoming cautious on markets like gold and metals following Trump victory. Bullion market has turned in wait and watch mode to see how Trump's policy pans out. While policy uncertainties like his stand on Trans-Pacific Partnership (TPP) and other such multilateral agreements, US interest rates as well as extension to Fed Chairperson Yellen and tax cuts remain, gold is seen as a buy on dip market with focus shifting back to Federal Reserve's stand on interest rates. The yellow metal may see profit booking and hedging by miners at higher levels with futures direction depending upon more on China.
Even in India, MCX prices fell sharply from Rs 1,200 jump on MCX futures on Wednesday morning in the opening session. Most short sellers until a day before caught red handed and later many of them who have squared off shorts felt the jolt when they saw gold falling apart.
Today on MCX gold futures was trading above Rs 30,000.
On metals, when asked, Andrew Cole, Principal Metals Analyst, London-based Metal Bulletin Research told Business Standard that, "metals have been rising since last one week and it got further excuse to move up from the Trump victory where he had promised to spend massively to overhaul the country's transport, telecommunications, water supply, and electricity infrastructure. That sounds like a boost for metal demand." However, he says, "After all, a Trump presidency does bring a lot more uncertainty to global markets and in the longer-term, we have to wait and see what a Trump presidency really means for the metals' fundamentals. So prices probably have to correct this rapid advance at some point as there is a lot of selling potential out there.
According to him, underlying trend supports bulls as, "China is looking more stable, supply-demand balances looking tighter and investors returning to commodities having recognised that the asset class has begun its next cyclical upswing."
The Mexican peso plummeted by over 13%, taking silver in local terms to test the high that has been posted twice this year already, back at February 2013 levels. Mexico is the world's largest silver producer with 21% of world mine production. Silver on Thursday was trading at $18.74 even as gold fell below $1280 per ounce. On MCX, silver was trading above Rs 44,000 per kg.
The GFMS 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 hazier, 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."
