(Thai News Agency, CNBC and Kitco.com) – Gold prices plunged by 250 baht this morning (Feb. 10) after US President Donald Trump’s tax reform statements pushed the dollar higher, Thai News Agency said.
Gold Traders Association said today that the 250-baht drop in gold prices led to gold bars being bought at 20,250 baht a baht weight and sold at 20,350 baht while gold ornament was bought at 19,889.92 baht and sold at 20,850 baht.
According to a Hua Seng Heng Gold Futures Company’s analysis gold price dropped to the lowest point of 1,227 dollars an ounce yesterday after the dollar surged against key currencies with the main factor being US President Trump revealing that he is going to announce a major tax reform in one to two weeks’ time and it is expected this will take place on Feb. 28 when he addresses a joint session of Congress.
This spurred stocks the world over higher and there was pressure to sell gold, which is a safe haven asset, with prices dropping by 20 dollars.
According to CNBC, the dollar stood atop large gains early today (Feb. 10) after soaring broadly overnight on comments by President Trump that he would announce the most ambitious tax reform plan since the Reagan era in the next few weeks.
The dollar had enjoyed a big surge after Trump won the US elections in November on pledges to inject the economy with large-scale fiscal stimulus. But the “Trump rally” had faded over the past few weeks with more focus on the new president’s protectionist trade rhetoric and his support for a weaker dollar.
The dollar index against a basket of major currencies was up 0.1 percent at 100.710, its highest in three days. The index was poised to rise 0.8 percent on the week.
Meanwhile Gary Wagner of Thegoldforecast.com said at Kitco.com that multiple factors can be cited for Thursday’s selloff. The first is a tremendous advance in US equities, resulting in new record highs in the Dow Jones Industrial Average, Standard & Poor’s 500, and the NASDAQ Index. This risk-on environment has been partially attributed to statements made by President Trump indicating that details on his tax relief plan are forthcoming.
As far as the outlook for gold prices go, the answer must be framed within specific time parameters, he said, adding that there could right now be a short-term pause, with traders and investors taking profits and awaiting further action of this new administration. However, the long-term prognosis for gold prices is still solidly bullish.
This rally began mid-December of last year when prices reached a low of $1,124 per ounce. From mid-December until January 22, gold prices surged approximately $100 in value, trading to $1,220. This was followed by a mild correction of roughly 38%, moving gold prices back down to $1,180 on January 27. Near the end of January, gold prices began a second leg of this rally moving gold prices roughly $60 higher. This week, gold reached an intra-day high above $1,240.
This recent rally in gold has been fueled by the uncertainty factor that is intrinsic to the new US administration’s leadership style and tactics. Fueled by 140 word soundbites through Twitter, as well as executive orders continuing to divide an already polarized nation, the simple fact is that the tone and timbre of President Trump’s leadership style will probably not change or soften, Mr Wagner said
If that is the case, traders have probably not seen the last of increased market volatility or higher gold prices. However, this could certainly be a point at which gold prices are consolidating and correcting from the recent advances.
Top: The Chinese god of prosperity peaking out of a traditional Chinese gold ingot. Photo: Brian Jeffery Beggerly (CC-BY-2.0)