Trump trade fades: Gold trades at levels last seen on Nov 10

Gold is back at the levels last seen on November 10, suggesting the Trump Trade has run out of steam.

The yellow metal clocked a high of $1287.26 in the Asian session today. The metal was offered following Trump’s victory. Prices dropped to a low of $1222 levels in December, before recovering to $1200-$1230 levels on the back of the rising US inflation expectations.

The next leg higher, i.e. from $1230-1240 to $1287 levels has been fuelled by a flight to safety amid heightened geopolitical tensions. President Trump’s bearish comments on the US dollar and dovish comments on the interest rates are also keeping the metal well bid in Asia.

Weak inflation expectations may hurt gold

US 10-year breakeven inflation rate is on the retreat. The speculation that inflation has peaked across the advanced world is gathering pace as well. This is bad news for gold bulls.

Gold Technical Levels

A move above $1300 (psychological hurdle) would open doors for $1307 (Nov 4 high) and $1311 (July 21 low). On the other hand, a breakdown of support at $1237.25 (hourly chart support) could yield a pull back to $1270 (hourly 50-MA) and $1263 (hourly 100-MA).