| | |
|
USAGOLD/Peter A. Grant/01-17-17
Gold surged to fresh 8-week high as the dollar took a double hit: One from President-elect Trump and one from a sharp rebound in the British pound. The yellow metal is now up more than 5.5% YTD, and more than 8% from the December low.
The dollar index tumbled to a six-week low after President-elect Donald Trump told the Wall Street Journal that the dollar was “too strong.” So, what might the new President do about that?
That question should give dollar bulls pause. As I stated in this morning’s Snapshot, perhaps the easiest first step would be to appoint a couple doves to the two open seats on the Fed’s board of governors. That could disrupt the expectations of two or three rate hikes this year, pushing the dollar lower in the process. That would bode well for gold.
Today’s rebound in Sterling put further pressure on greenback. The pound rallied nearly 3% versus the dollar and almost 3% against the euro. While PM Theresa May confirmed there would be a hard-Brexit, the currency rebounded in classic ‘sell the rumor, buy the fact’ fashion. Ms. May confirmed that her government would be aggressively looking to strike the best trade deals possible and Parliament will get to vote on any deal struck with the EU. That all seemed to offer some level of relief to markets, but this is still going to be a cumbersome process fraught with risk.
Those Brexit risks, along with Mr. Trump’s penchant for shooting from the hip will likely keep markets on edge for the foreseeable future. Gold should then continue to benefit from safe-haven flows.
| |
Read the rest of the article at
USA Gold
