By Kitco News
Wednesday November 09, 2016 11:02
(Kitco News) - Gold is losing some of its shine after a 5% rally overnight as Republican candidate Donald Trump secured his position as the new President of the United States; however, one firm is expecting gold to continue to push higher.
Following Trump’s election victory, early Wednesday, UK-based research firm Capital Economics has increased its year-end price target for gold and silver. The firm now expects gold to end the year at $1,400 an ounce, up from its previous target of $1,300 an ounce; the yellow metal is expected to end 2017 at $1,450, up from $1,400. For silver, the firm looks for prices to end the year at $20 an ounce, up from its previous target of $19, rising to $20.75 by 2017, up from the previous target of $20.50.
“The surprise victory for Donald Trump in the U.S. Presidential election is likely to lead to greater safe-haven demand over the next few months, with gold a clear winner,” said Caroline Bain, senior commodity economist at the firm.
Well off its overnight highs, December gold futures last traded at $1,289.50 an ounce, up 1.16% on the day. Silver last traded at $18.65 an ounce, up 1.6% on the day.
According to Paul Ashworth, chief U.S. economist at Capital Economics, said that safe-haven demand is waning as markets calm down following what he describes as Trump’s “statesmanlike” acceptance speech.
However, Capital Economics expects that it could only be a matter of time before safe-haven demand and gold prices pick up again.
“The one thing we do know is that Trump is a volatile character and so even if a sense of calm returns before long, there will be the constant risk of a renewed blow-up over the coming months and years,” he said.