Gold prices tumbled 3 percent to a five-month low on Friday, hit by a broad selloff in commodities as well as surging bond yields on speculation a splurge of U.S. infrastructure spending could stoke inflation.
Spot gold was down 3 percent at $1,222.38 an ounce by 3:04 p.m. EST (2004 GMT) after touching a session low of $1,219.40, the weakest since June 3. The selloff put gold on track for its poorest weekly performance since June 2013, even after it rallied nearly 5 percent on Wednesday when results showed Republican Donald Trump was the U.S. president-elect.
Eighteen market professionals took part in the Wall Street survey. Nine participants, or 50%, look for gold to be higher next week. Eight, or 44%, called for lower, while one, or 6%, sees sideways prices ahead.
Meanwhile, 803 Main Street participants submitted votes in an online survey. A total of 414 respondents, or 52%, said they were bullish for the week ahead, while 292, or 36%, were bearish. The neutral votes totaled 97, or 12%.
George Milling-Stanley, head of gold strategy at State Street Global Advisors, said that he is ignoring the “noise” following the U.S. election and instead is focusing on the long-term trend of low interest rates.
In a recent interview with Kitco News, he noted that gold prices could continue to push lower as the market gets closer to the December Federal Open Market Committee meeting.
as research firm Capital Economics said this Friday, markets appear to believe that a Trump victory will lead to major infrastructure spending and much more aggressive Fed tightening.
Gambarini added that the prospect of a big deficit-funded fiscal stimulus is likely to push inflation well above the Fed’s 2% target, meaning that even if the Fed raises rates more aggressively, real interest rates should remain low.
Reference: Kitco, Reuters
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