USAGOLD/Peter Grant/07-18-17
Gold is climbing for a third consecutive session, with the dollar remaining under broad pressure. More weak inflation data further erodes September rate hike expectations adding additional weight to the greenback.
Both U.S. import and export prices fell in June, missing expectations. That drove the dollar index to pressure 11-month lows at 94.46.
Recent gains in the yellow metal suggest that those that were long gold in anticipation of inflation — the so-called Trumo reflation trade — have likely exited the market. The buyers now are probably those with the mindset that realize the Fed was never going to get the inflation they desired with the dollar at 14-year highs.
Not only are there mounting expectations that the Fed will pause, but once again there are rumblings that they may have to reverse course. At this point, the Fed has only half the 300 bps they historically need to deal with a recession. That is, unless they go negative.
It looks like the latest iteration of the GOP’s healthcare bill is dead in the water, without the votes to clear the Senate. That does not bode well for the broader Trump agenda. Without any help on the fiscal side, the onus falls on monetary policy once again to underpin the economy.
