GOLD jumped to its best level since August 2016 touching a high of US$1,365.40 an ounce after comments from US Treasury Secretary Steven Mnuchin at the World Economic Forum in Davos Switzerland sent the dollar lower.
But the metal reversed course in the afternoon after US President Donald Trump told CNBC that Mnuchin’s comments had been misinterpreted:
“The dollar is going to get stronger and stronger and ultimately I want to see a strong dollar,” Trump said.
Towards the close of trading in New York, the most active futures contract on the Comex market had fallen back to US$1,345 an ounce.
Volumes were massive with just under 50m ounces of February delivery gold traded.
Gold and the US dollar usually move in opposite directions and the greenback has declined sharply against major currencies since Trump's inauguration.
The euro has gained 15 per cent against the US currency, the British pound more than 13 per cent and the Canadian dollar nearly eight per cent in little over a year.
Gold has gained more than US$100 an ounce since mid-December.
Large-scale speculators increase their exposure to gold on derivatives markets by doubling net long positions – bets that gold will be more expensive in future – in the space of three weeks to the equivalent of 20m ounces.
Retail and institutional investment in gold-backed exchange traded funds (ETFs) also continues to grow.
According to data compiled by Bloomberg ETF vaults now hold around 2,250 tonnes, the most since May 2013, as investors piled in ahead of a US government shutdown. mining.com/GB