Will gold cross $1,400 in the Trump era?

Gold prices are currently set for a fresh rally given the uncertainty and volatility in global markets. Investors, who assembled in Dubai on the historical launch of DGCX Shanghai Gold Futures  on Sunday, are keenly watching the trends as they resort to the ever proven safe-haven investment in the yellow metal with leading brokers predicting $1,300 per ounce in the coming months.
"Gold is the safe-haven proven asset and is indeed the best performing asset class of this century. Since the summer of 2001, the gold prices are up over 320 per cent and this is a clear indication that investors try to protect their investments through the uncertainty by investing in gold. We have to face four years of uncertainty in Trump's tenure," said Jeffrey Rhodes, principal consultant at RAKBank.  "I think gold could easily touch $1,400 per ounce on the higher side."

Gold rose more than 1 per cent on Friday to hit a five-month high as investors sought safe-haven assets after the United States launched cruise missiles against a Syrian air base, potentially escalating tensions with Syrian allies Russia and Iran. Spot gold had risen 1 per cent to $1,263.53 per ounce. It earlier climbed as much as 1.4 per cent to its highest since November 10 at $1,269.28, and was on track for a fourth straight week of gains. US gold futures also climbed 1 per cent to $1,266 an ounce. 
The dollar fell 0.2 per cent against the safe-haven Japanese yen to 110.54. Strong job gains will likely add upward pressure on wages, supporting higher interest rates, which could pressure gold.
Ole Hansen, head of commodity strategy at  Saxo Bank, said: "We maintain our end-of-year forecast for gold at $1,325/oz and based on a pick-up in industrial metals, we could see silver reaching $19/oz." 
"Some of the factors that could aid gold are that market is pricing in too much US growth and a too-hawkish Federal Open Market Committee, (FOMC); multiple geopolitical risks attracting diversification and hedging demand and renewed equity market turmoil will lead to lower bond yields and helping  gold to sustain higher level. However, the Trump's growth creation pledge drives continued rotation out of bonds into stocks and surprise pickup in US activity puts additional pressure on the FOMC to hike more," he said.
Hong-Kong based, Alfred Yeung, chairman of Glory Sky Group, said: "Gold prices are all set to surge given the uncertainty and volatility in the global markets. The price will surge to a level beyond $1,300 to as high as $1,400 per ounce."
 
DGCX taps China bullion 
The Dubai Gold and Commodities Exchange (DGCX) announced the historic launch of DGCX Shanghai Gold Futures (DSGC), following the signing of a landmark deal with the Shanghai Gold Exchange (SGE) last year. The yuan-denominated contract, DSGC, marks the first-ever usage of the Shanghai Gold Benchmark Price in international markets. The launch of the DSGC was officially announced at the two-day Dubai Precious Metals Conference (DPMC). The introduction of DSGC opens up a vital trading link by providing investors across the globe access to the largest bullion market, which is connected to over 10 million institutional customers, 8.3 million individual customers and 55 certified gold vaults. The contract is size 1,000 grammes (1kg) with the contract price quoted in CNH per gramme.
Ahmed bin Sulayem, chairman of the DGCX and executive chairman of DMCC, said the listing of the Shanghai Gold Futures contract on DGCX is a landmark development. 
"With the launch of this contract, all key bullion price indicators are accessible on a single platform, with significant margin efficiencies. We are delighted to further this partnership with the Shanghai Gold Exchange, today the largest bullion market in the world."
- sandhya@khaleejtimes.com