After reaching a three-and-a-half-month high last week, the gold price edged lower on Tuesday (February 28) ahead of US President Donald Trump’s first address to Congress.
“The dollar did change a little bit,” Bill O’Neill, co-founder of LOGIC Advisors, told the news outlet. “There was maybe a bit of book squaring ahead of Mr. Trump’s speech. Every market today appears to be focusing on this and is cautious as a result of that.”
Earlier in the week, Trump said he would propose a budget that would increase spending on defense, and cut corners elsewhere, the Economic Times wrote.
Investors often turn to gold in times of uncertainty, so it might seem strange that the gold price has been so shaky ahead of Trump’s address. Many market watchers appear to be playing it safe, however.
“There is elevated uncertainty ahead of the (Trump) speech. It’s clear that there is a lot of doubt expressed about how much Trump’s policies are going to be pro-growth and pro-inflation,” Nitesh Shah, an ETF Securities analyst, said to Reuters.
That said, a higher gold price may be coming. “With investors maintaining a cautious approach ahead of Trump’s speech to Congress this evening, bulls may take advantage of the anxiety to elevate gold prices higher back above $1,260,” Lukman Otunguga, research analyst at FXTM, explained in a note.
Adrienne Murphy, chief market analyst at AvaTrade, is even more optimistic about the yellow metal’s prospects.
“Gold should reach $1,300 in the next few months,” she told MarketWatch. “Once it breaks this point, I’m bullish on the commodity. If the Fed does not raise rates in March, I see gold hitting this point within the month.”
Similarly, analysts at Heraeus Metal Management said in a note that they “continue to see gold well supported — overcoming resistance at $1,249 per ounce, may suggest higher prices.”
“We see the next resistance level at $1,278 and also the $1,300 mark is moving into the sight of investors,” their note also says.
As of 6:51 p.m. EST on Tuesday, the gold price was at $1,245.90. Trump will deliver his speech to Congress at 9:10 p.m. EST, or 6:10 p.m. PST.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.