USAGOLD/Peter A. Grant/02-10-17
Gold slipped modestly lower in overseas trading before recovering to unchanged on the day. Stronger stocks and recent dollar gains conspire to limit the yellow metal’s upside.
Meanwhile, political and geopolitical uncertainties continue to drive safe-haven buyers, underpinning the market. Those buyers are likely to step in ahead of the $1200 level, even if shares and the greenback continue to gain.
Inflation risks continue to percolate below the surface as well. Import prices rose more than expected in January. Export prices were just above expectations as well.
If the Trump administration is successful in cutting taxes, while simultaneously ramping up government spending, the Fed is going to get the inflation that they’ve been desperately trying to generate for a decade. Will they be able to check the rise via rate hikes? That remains to be seen, but they have a history of being well behind the curve.
Gold is of course the classic inflation hedge. Wealth preservation minded clients should be building their hedge while prices are still relatively low.