For all the unpredictability of President Donald Trump’s policies in his first 100 days, gold has failed to reclaim the heights before his win in November, and some investors doubt this will happen any time soon.
After closing at $1,305.06 an ounce on the Friday before Trump’s election, prices cratered more than 13 percent through Dec. 22. They ground back to $1,289.76 this month after Trump’s airstrikes on Syria and Afghanistan, and on worries over North Korea and the outcome of the French presidential vote, before slipping to as low as $1,263.17 on Thursday.
Without huge surprises from Trump, some investors are inclined to see more losses as the U.S. economy stays strong, the Federal Reserve tightens, bond yields rise and inflation remains subdued. Goldman Sachs Group Inc. predicts gold at $1,200 in three months after Emmanuel Macron won the first round of the French election and is projected to beat Marine Le Pen in the runoff.
“Every now and again, something geopolitical, or financial market-related causes people to knee-jerk buy gold, but the two key drivers over any extended period of time have been dollar debasement and inflation,” said Troy Gayeski, a senior portfolio manager at SkyBridge Capital in New York, which managed $11.8 billion of assets as of Feb. 28. “There’s very little discussion about buying gold now as an inflation hedge.”
The U.S. central bank raised interest rates in March and stuck to projections for a further two quarter-point hikes this year and three in 2018. The cost of living unexpectedly declined last month for the first time since February 2016, and price increases slowed from a year earlier, according to the Labor Department.
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