| | |
|
USAGOLD/Peter A. Grant/03-23-17
Gold remains generally well bid, although earlier tests above important resistance at 1250 have faltered. While continued weakness in the dollar should limit the downside in the yellow metal, a bit of a reprieve in the stock market is probably limiting the upside.
Everyone is keyed on the AHCA House vote today as a proxy for President Trump’s broader reflation agenda. The feeling being that as goes the AHCA vote, so goes deregulation, tax reform, trade deals and fiscal stimulus. Pretty much everything that had markets so excited in the wake of last November’s election results.
The best case is that the reflation trade gets delayed for some period of time as the GOP sorts out their differences on healthcare. The worst case would be a complete derailing of the Trump agenda.
The biggest casualty of such an outcome would probably be the stock market, which went from bubbly to positively frothy in recent months. We have already seen risk appetite dissipate this week, to the benefit of Treasuries and gold as safe haven buying ramped up. If AHCA fails to clear the house, those trends are likely to accelerate.
The most recent speculation suggest somewhere between 27 and 32 Republican representatives are either hard “no”, or leaning “no”. If accurate, AHCA will not pass. Rather than allowing that to happen, leadership would likely postpone the vote in the hope of building additional support.
However, that too would be seen as a negative outcome. Stocks would likely fall. Treasuries would rally, pushing yields lower. That would put additional pressure on the dollar. All of that would be positive for gold.
| |
Read the rest of the article at
USA Gold
