US election fails to trump Brexit for gold rally


Gold is not reacting as strongly to the US election as it did to Brexit, Thomson Reuters GFMS says.

Head of metals at Thomson Reuters GFMS Rhona O’Connell says there had been a “relatively muted” reaction from gold overall “certainly by comparison with the reaction to the Brexit vote.”

Gold rose $20 to around $1,300 an ounce this morning. The ETFS Metal Securities Ltd Eft Phy Gold ETP has been one of the top five share buys via Hargreaves Lansdown.

In the immediate aftermath of Brexit gold had risen to $1,350 an ounce.

“The fact that gold has not broken through that important technical level and has already attracted some producer selling means that the markets are sitting on their hands and this shouldn’t really come as too much of a surprise. 

“It’s important to remember that headline grabbing policies are likely to be tempered by advisers and on that basis I would expect gold to mark time for now.”

O’Connell says if we are heading for an economic period that raises the prospect of a widening budget deficit the market should develop a “buy-on-dips pattern rather than selling rallies”.

Adrian Ash, head of research at BullionVault says:Brexit, the US election, Italy’s constitutional referendum – they aren’t the reason for gold’s 25 per cent recovery in 2016. These events just give a focus to the underlying switch in the political, financial and investment backdrop.

“If Trump proves to be the belligerent, high-spending protectionist that America just voted for, the underlying move in world gold prices looks set to keep rising.”

FundCalibre’s Darius McDermott recommends the BlackRock Gold and General fund for investors with a “glass half full” view of the US election.

However, for those that wanted a defensive, multi asset fund he recommended the Church House Tenax Absolute Return Strategies and Premier Defensive Growth funds.