'Trump Victory Effect' on Futures Gold
In the last two days, the gold futures market has experienced 'Trump Victory Effect' which might take another week to finally see the 'true market' effect, here's why:
1. Post-Election Reactions: Following Trump’s win, the market likely experienced volatility due to investor adjustments based on expectations for his policy direction. Immediate reactions to election results often lead to short-term price swings as traders assess potential impacts on fiscal policies, international relations, and economic stability.
2. Market Uncertainty and Safe-Haven Demand: With Trump’s return, there could be increased demand for safe-haven assets like gold, especially among investors hedging against potential volatility in stock markets and other high-risk assets. This initial demand could have driven up prices temporarily.
3. Profit-Taking and Resistance Levels: The chart indicates that gold hit resistance near the 2712 level (20-EMA) and has since retraced slightly. This suggests that after an initial rally, some traders may have taken profits, especially as gold approached this technical resistance. This type of profit-taking is common after major events, especially if there’s no immediate clarity on policy direction.
4. Technical Indicators: In the 6-hour chart, the price has fluctuated between the support level around 2650 and resistance near 2712. The slight pullback from the highs could indicate consolidation as the market digests the election outcome and awaits further policy signals from Trump’s administration.
5. Global Factors: Other global economic factors, such as Federal Reserve announcements, dollar strength, or geopolitical events, may have contributed to the recent price action. For example, if the Fed hinted at interest rate stability or a hawkish stance to combat inflation, this could temper gold’s upside due to higher yield expectations.
Overall, the last two days show a typical reaction to significant political events with a combination of initial rallies and profit-taking. The market may remain in a consolidation phase until there is more concrete information on Trump’s policy intentions and any Federal Reserve responses to potential fiscal changes.
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