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USAGOLD/Peter A. Grant/01-19-17
Gold is straddling the $1200 level as recent gains continue to get corrected/consolidated after an 8-week high was established earlier in the week at 1218.90. The yellow metal is being weighed by a firmer dollar, but safe-haven interest continues to limit the downside.
A round of solid U.S. economic data today lifted expectations that the Fed would raise rates multiple times this year. U.S. yields moved higher, pulling the dollar higher as well.
Speaking yesterday at the Commonwealth Club in San Francisco, Fed Chair Yellen reaffirmed that she expects to raise interest rates “a few” times this year. “Now it’s fair to say the economy is near maximum employment and inflation is moving toward our goal,” said Yellen.
Yellen did not touch on how the new administration might alter the Fed’s outlook, saying only that regulatory and fiscal policy can have an influence on the economy. We’ll have to wait and see what regulatory and fiscal policies might be implemented by the Trump administration, and then how those might in tern influence monetary policy.
Mario Draghi is taking a more cautious approach, citing downside risks and downplaying recent upticks in inflation. The ECB held steady on policy today and Draghi’s tenor was viewed as remaining quite dovish.
Stephen Poloz of the Bank of Canada struck a similar tone yesterday, saying that rate cuts remain on the table amid global uncertainty. Mr. Trump will be sworn in as the 45th President of the United States tomorrow and policymakers the world-over are anxiously waiting to see what policy decisions he makes.
At the World Economic Forum in Davos, Switzerland the concern among global elites is palpable. “So many people feel anxious. So many people feel that this is one of the most dangerous times,” said Ian Goldin, a professor of globalization and development at Oxford University. Whether he was talking about the common man or the elites in attendance at the forum was not so clear.
One thing is certain though: In dangerous times, global elites and the common man alike turn to gold as a safe-haven.
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