The Daily Market Report: Gold Remains Well Bid after Setting New 5-month Highs Overnight

USAGOLD/Peter Grant/04-17-17

Gold remains generally well bid, amid geopolitical risks and rising concerns about the true health of the U.S. economy. While trading remains thin today due to the Easter Monday holiday, both the fundamental and technical biases remain to the upside.

The dollar remains defensive in the wake of last week’s comments by President Trump, regarding his concerns about the strength of the greenback. See our Week in Review video for a detailed examination of this topic.

One might surmise that talk of the Trump administration abandoning the so-called “strong dollar policy,” has rather bullish longer-term implications for gold. That is probably true, but anyone remotely tuned-in to the FX market knows that the “strong dollar policy” is and always has been a farce.

Trump’s about-face on Janet Yellen — she’s apparently no longer “toast” — suggests he just may be prepared to align the Fed toward a weaker dollar. Trump gets to appoint three members to the Fed’s board of governors, and I would anticipate doves based on his admission to The Wall Street Jpurnal: “I do like a low-interest rate policy, I have to be honest with you.”

If the current tightening bias comes to an end, that would be a good omen for gold as well. The prospects for a June rate hike have dropped significantly on the heels of Trump’s comment and a bout of rather weak economic data last week that further lowered Q1 growth prospects.