UpdateGold bulls say history may repeat as President Trump comes in
Brexit and tensions with China could power bullion higher
Gold bulls wagering the bullion rally has more room to run may have history on their side with the arrival of a new US president.
A look at recent presidential transitions supports optimism among traders over the metal’s prospects. Gold has averaged gains of almost 15 per cent in years marking the inauguration of a new president since the 1970s, advancing in five of those seven years. In contrast, the S&P 500 index of equities declined in four of those years for an average loss over the period of 0.9 per cent.
From Presidents Gerald Ford to Barack Obama, bullion has often served as a haven in times of political flux. The metal has climbed about 4 per cent this year as questions over the possible economic impact of Donald Trump’s policies add to investor angst over Brexit and mounting trade frictions.
Bulls reason that gold will extend its gain as scant details of Trump’s fiscal stimulus programme and tensions with trading partners including China unnerve investors.
“We have no idea what’s going to happen with some of Trump’s policies -- everybody is a little nervous,” said Axel Merk, San Francisco-based founder of Merk Investments LLC, which manages US$300 million in assets. “Gold is relatively undervalued and will push higher.”