Trump administration's setback, gold at four-week high

Although gold suffered greatly after the US presidential election due to Donald Trump's grandiose announcements, last week we saw that his campaign promises may remain just that – promises. Friday's defeat of his administration on Obamacare strengthened gold and sent the dollar to its lowest level since November last year.

Last week started relatively well for gold, thanks to the dollar, which fell to its lowest level in six weeks on the back of protectionist comments by Americans at the G20 summit. At the same time, markets were quite volatile due to comments by FBI Director James Comey, who confirmed on Monday that the agency is investigating possible Russian interference in the recent US presidential election.

After a slight correction resulting from an equally slight rebound in the dollar, Tuesday brought further gains for gold. The US currency lost ground again, this time due to Emmanuel Macron's strong performance in the presidential debate in France. The centrist candidate performed much better than the controversial Marine LePen, which had a positive impact on the euro. Gold soared towards the USD 1,250/oz mark at that time, but stopped at USD 1,247.60 per ounce for now.

Gold breaks through the $1,250 barrier

Wednesday saw the strengthening of the strong position of the royal metal, while the dollar plunged to its lowest level in seven weeks. This was mainly due to growing uncertainty about the actual power of President Donald Trump. It turns out that his impressive plans may not find support in Congress. On the wave of further comments on this issue and the Republicans' dwindling chances of abolishing Obamacare, which Trump hates, gold broke through the psychological barrier on the spot, reaching USD 1,251.26/oz, and gaining nearly USD 50 per ounce since last Wednesday. Interestingly, however, it did not react to the terrorist attack in London. Perhaps these are already becoming a nightmarish everyday occurrence in Europe.

On Thursday, the dollar strengthened slightly, and although gold reached $1,253.12/oz on the spot market, its highest level since the end of February, the metal stabilized below the $1,250 mark. However, this is still a very strong result, for which investors can thank, above all, the increasingly widely discussed impotence of the Trump administration in the face of Barack Obama's healthcare program. If it fails to change it, Trump may also fail on the issues of announced changes in the field of taxes and infrastructure.

Trump powerless, dollar loses ground

On Friday, almost until the close of trading overseas, gold was heading north. As predicted, Trump's plan fell apart, and his administration's severe defeat sent the dollar to its lowest levels since last November. As a result, the week ended with gold at $1,242.90 per ounce. In Poland, after Friday's close of the London Stock Exchange, we paid PLN 4,925.25 per ounce of gold.

It is worth noting, however, that among precious metals, palladium, which is dependent on the condition of the automotive industry, is shining the brightest today. Last week, its price reached $815 per ounce, the highest in nearly two years.    

Marianna Wodzińska
Head of Trading
Mennica Skarbowa S.A.