USAGOLD/Peter A. Grant/01-20-17
Gold has rebounded in the wake of the swearing-in of Donald Trump as the 45th President of the United States. Stocks are choppy, bonds are underpinned and the dollar has slipped. Everything is within the recent ranges as markets digest President Trump’s inaugural address.
The “Top Issues” that were immediately posted on the WhiteHouse.gov website are consistent with the “America First” theme of the speech. What this will look like in reality remains to be seen, but the website states unequivocally that the U.S. will withdraw from the TPP and look to renegotiate NAFTA. Globalists the world-over are understandably fretting as the trend toward nationalism seems to be gaining momentum.
This is going to lead to considerable uncertainty with regard to trade and foreign policy in the weeks and months ahead. Such uncertainty tends to favor safe-haven assets like gold.
Much of Mr. Trump’s agenda needs to make it through Congress and that’s going to take some time. Some things like the repeal of portions of Obamacare seem to have been teed-up in advance. However, he is also expected to take some executive actions today on a number of different fronts.
Steven Mnuchin, Trump’s nominee for Treasury Secretary, said during his confirmation hearing this week that the debt ceiling should be raised “sooner rather than later.” If the Trump administration is successful in both cutting taxes and increasing government spending on infrastructure, the U.S. is likely to need considerable clearance on the debt cap.
If the haven bid takes gold beyond the 8-week high set earlier in the week at 1218.90, attention shifts to the 100-day moving average (1234.11) and the halfway back point of the decline seen in the latter half of 2016 (1248.82).