Gold continues to grind lower on dollar strength

Gold continued to grind lower this morning – down $8 at $13.08 – mostly under pressure from a strengthening dollar, now trading near its high on the year.  Silver is down 10¢ at $16.41.  The dollar drag though could turn to a boost when President Trump announces the decision on the Iran nuclear deal and the resumption of sanctions. Those sanctions in turn could push oil prices higher though oddly, as this is written, oil is down on the day.

“A stronger dollar has created headwinds for gold but we don’t see the dollar going much higher on a medium term basis and in terms of geopolitics there are some factors to keep an eye on,” said Jens Pederson, senior analyst at Danske Bank, told CNBC. “It’s not our base case that the (Trump Iran announcement) will turn out to be a big market moving event but the risk (is there) that Iran will be hit with sanctions and (so we) could see gold buying again.”  Meanwhile, the problem with emerging country currencies and debt continues to fester in the background the result of the dollar’s rapid rise the past few weeks.  Argentina’s peso and Turkey’s lira both dropped to record lows against the dollar.

Quote[s] of the Day
“You know, so as you noted, the—what we’ve said in the longer-run statement of goals and monetary policy strategy is that we would be concerned with sustained or persistent deviations of inflation either above or below. We’ve also said—in minutes and in speeches and things like that—that that is a symmetric objective. So, that’s how we think of it. And, I think it’s—I wouldn’t characterize what we’ve done over the last five years as tolerating, you know, an undershoot of inflation.” – Jerome Powell, Fed chairman (Press conference 3/21/2-18)

“I would go back to the thought that, you know, we made one decision at this meeting, and that decision was to raise the federal funds rate by 25 basis points. The projections are really just individual projections that are submitted and then compiled. And, you know, you’re mentioning the median as being, you know, three and four being close, but, you know, I think, like any set of forecasts, those forecasts will change over time, and they’ll change depending on the way the outlook for the economy changes. So that’s really all I can say. It could change up. It could change down.” – Jerome Powell, Fed chairman (Press conference 3/21/2-18)

Chart[s] of the Day

Charts courtesy of

MK note: Three charts at the heart of the two-front – trans-Pacific and trans-Atlantic – trade war.


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