Irascible and capricious, Donald Trump would trigger a series of geopolitical crises and give gold, widely viewed as a safe haven, a boost or so many investors assumed. Yet "remarkably, after all the excitement" since he won the presidency, says John Authers in the Financial Times, gold "is almost exactly where it was on election day". It has slipped by 5% or so from January's 17-month high and now costs about $1,300 an ounce.
This is partly because investors have got used to "violence, political turmoil and uncertainty", Brian Larose of ICAP Technical Analysis told Barron's. Trump's bark has also so far at least proved worse than his bite, so the markets have become inured to his tendency to pick fights.
Meanwhile, gold is an asset that thrives on bad news, so robust worldwide growth, and the gradual increase in long- and short-term interest rates, undermine its appeal: gold offers no yield. The strengthening dollar hasn't helped either. Gold is priced in dollars so a stronger greenback makes it more expensive for holders of other currencies.
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Investors should nonetheless continue to hold 5%-10% of their portfolios in gold. It is an insurance policy against a jump in inflation which may not be far away, given how tight labour markets are in the US and Britain because it maintains its value. And with the euro crisis flaring up again, the world has gained another potential geopolitical flashpoint.
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