Gold Resurgent?
- Fed minutes reflect policy uncertainties
- Dollar posts biggest drop since Trump elected
The dollar backed off from 10 year highs against most currencies yesterday as Fed December minutes reflected uncertainty on Donald Trump's policies. Gold reacted by touching 4 week highs in USD terms last night.
Gold Asset Allocators Start the New Year Right
Interactive chart HERE
Spot Gold was trading $1173 at 8:00 AM ET up almost 1% after trading $1179 overnight highs. Silver continues to be the stronger of the 2 metals benefiting from its industrial qualities and now its more precious aspects. Spot Silver is up 14 cents at $16.53 last
Fed meeting minutes betrayed concern over how Trump's policies, if enacted would impact their planned rate increases for the next few years. The FOMC repeated its goal of wanting to raise rates gradually over time. This put a lid on a market discounting more hawkish rate policies. “Expectations of aggressive rate hikes in 2017 may be overdone, leaving the yield environment favorable to gold.” said Jonathan Butler, PM strategist at Mitsubishi.
"For now the yellow metal is a slave to the USD absent an exogenous event. Today's reaction is just a reflection of a market too frothy on the upside in the dollar, " said one NY based metals trader. What we like is the confirmation that the Fed is more worried about killing the economy than keeping inflation in check apparently. This will be very good for Gold down the road as the FOMC plays catch-up."
$1200 is Key
Some analysts think the psychological level of $1200 will be important as asset allocators waiting to deploy will start to pile in, while trapped longs from above will consider liquidating. Look for a potentially harsh pull back if we get there. Stops will likely be triggered on both the buy and sell-sides
Platinum is up about 1.2% trading $955 as of this writing. Palladium has backed off its recent run.
Good Luck
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