Failed to rally after Trumps win

unduhan-31Gold prices saw a surprise finish lower on Wednesday after Donald Trump’s stunning U.S. presidential win as investors muddled through the uncertainties raised by the Republican’s unorthodox approach to politics.

“Perceptions today may have little correlation with tomorrow’s reality, and the markets are reflecting this uncertainty,” Brien Lundin, editor of Gold Newsletter, told MarketWatch.

“There’s no denying the very bullish short-term effect of a Trump victory on gold,” with the world concerned about the “volatile personality of Trump,” he said. “But this is not reason to buy gold at this point, and may mark an opportunity to lighten up on positions with an eye toward buying back once the fundamental economic trends take hold once again.”

Futures prices for gold GCZ6, +1.13%  had spiked higher by as much as roughly $64 an ounce, or 5%, as U.S. election results rolled in late Tuesday into early Wednesday morning. But on Wednesday, December gold settled $1, or less than 0.1%, lower at $1,273.50 an ounce.

“The ‘Trump factor’ has been overall less striking than many have been expecting, given the level of political and economic uncertainty implied before the result” of the U.S. presidential election, said George Cassell, senior pricing specialist at S&P Global Platts in London.

The dollar pared all of the sharp losses it saw in early Wednesday trading and moved higher against the euro “keeping gold prices in check, why profit-taking by gold traders would have been largely expected,” said Cassell. The ICE U.S. dollar index DXY, -0.24%  climbed 0.8% to 98.60 in afternoon dealings, putting some pressure on dollar-denominated prices of gold.

U.S. equities were also scoring strong gains as gold prices settled, drawing more attention away from gold as a safe-haven investment.

But at the same time, “the chances of a lift in U.S. interest rates has slipped to around 40% from above 80% Tuesday, which is significant for gold prices in the medium term, with a [Federal Reserve] lift largely priced into gold before the election expected to provide upside” to gold prices, said Cassell.

“Analysts are now largely expecting buying on the dips, rather than selling rallies, as policies become clearer,” he said.

Before the election, gold prices were expected to benefit no matter who was elected president, with a Trump win potentially disruptive politically and economically, and a Clinton win seen as inflationary—both of which might have contributed to higher gold prices.

Read: Why gold will rise no matter who becomes the next U.S. president

But now that Trump has claimed victory, Chris Gaffney, president of World Markets at EverBank, pointed out that the fundamentals reasons for owning gold have not changed much.