NEW YORK (Scrap Register): Gold prices has fallen since Donald Trump won the U.S. presidential election, but look for the metal to eventually turn higher again, said Adrian Day, chairman and chief executive officer of Adrian Day Asset Management.
Day points out that many of the market moves since Trump’s win – stock-market gains and weaker gold – defied pre-election expectations. He explains that higher Treasury yields overrode the negative sentiment globally towards Trump.
Further, stocks got a boost from ideas that certain sectors would fare better under Trump, such as banks (less regulation), base metals (infrastructure spending), oil drilling and drug companies.
Still, Day said, many of the market moves were likely overdone. Going forward, a Trump presidency is likely to mean increased spending, including infrastructure and defense, but tax cuts and less regulation. Day also looks for higher interest rates, but not too high.
“With regard to [Fed Chair Janet) Yellen’s threat for a more ‘hawkish’ Fed to counter-balance fiscal profligacy, we would retort, I knew [former Fed Chair] Paul Volker, and she’s no Paul Volker,” Day added.
“We do not expect sharply higher rates, and further out we will likely see higher U.S. debt (already high) and higher inflation (already stirring). So the outlook a little further out—combined with easy money around the world, stronger Indian demand, possible geopolitical turmoil, and a decline in mine production—will be a higher gold price,” Day noted.