GOLD EXTENDS GAIN IN TRUMP ERA

Cassie Bastien

1/23/2017 11:09:00 AM

Daily Gold & Silver Market Report – 01/23/2017

U.S. dollar weakness and uncertainty for trade and economic growth at the start of Donald Trump’s presidency helped Gold prices gain Monday, adding to what had been a fourth-straight weekly advance through Friday. Carsten Fritsch and the commodities team at Commerzbank said in a note, “We believe that Gold is finding support from the weaker U.S. dollar, which depreciated noticeably following the inaugural speech given by the new U.S. President Donald Trump [on Friday] and is trading at a 6 1/2-week low against the euro this morning.” MarketWatch News Editor Rachel Koning Beals said, “selling pressure over the past several trading sessions resulted in the first weekly rise in Treasurys in a month last week, accounting for some of the gain in Gold which doesn’t bear a yield.” She continues, explaining spot Gold prices tend to “move inversely to the dollar because a stronger greenback can make commodities pegged to the buck, including Precious Metals, more expensive to buyers using other monetary units.”

SILVER PRICES CONTINUE HIGHER

Investors moved toward the safe-haven appeal of Precious Metals, driving Silver prices higher Monday, after President Donald Trump’s America First inauguration speech did little to ease uncertainty about his economic policies. Sam Bourgi with EconomicCalendar.com said, “Precious Metals have gained in each of the last four weeks, and appear poised to keep the momentum alive as uncertainty about U.S. economic policy weighs on risk sentiment. On Friday, President Trump vowed to put “America first” in a speech that struck a decidedly protectionist tone, raising concerns that the new administration could impact global trade.” Bourgi noted this continued political uncertainty dropped the U.S. dollar 0.4 percent, which is a more than one-month low against a basket of other major currencies. Bourgi closed saying, “A weaker U.S. dollar makes Precious Metals such as Gold and Silver cheaper for users of other currencies. … Though Trump’s inauguration failed to trigger capital flight from U.S. equities as some market participants had expected, risk-on assets could struggle to find support in the short-run.”

EUROPEAN STOCKS FALL, INVESTORS SEEK SAFETY

“European stocks and bond yields edged lower on Monday and the dollar briefly hit a six-week low after U.S. President Donald Trump began his term in office with a protectionist speech that drove a nervous market into safe-haven assets,” Reuters’ Abhinav Ramnarayan said. “Wall Street was set to open slightly lower, tracking stock markets in Europe and parts of Asia, having hit multi-year highs earlier this month on expectations Trump would boost growth and inflation with extraordinary fiscal spending measures.” Trump’s inaugural speech Friday led moved investors into higher-rated government bonds. As Ramnarayan reported, “Trump also made it clear that he plans to hold talks with the leaders of Canada and Mexico to begin renegotiating the North American Free Trade Agreement. U.S. stock futures were down 0.2 percent, pointing to a lower open after European stocks touched their lowest levels this year in early trades.” Investec Economist Victoria Clarke added, “The focus [Monday] morning is on the protectionist rhetoric and the lack of detail on economic stimulus, so it's a nervous start (to the presidency).” Rabobank Analyst Michael Avery said a protectionist U.S. could lead to a dollar liquidity squeeze, with Mexico and Asia likely the worst hit. “We would see outright confusion over what currency to invoice, trade, and borrow in: a 19th century world of competing reserve currencies in different geographic zones, but without the underpinning of Gold,” Avery said.

At 12:09 P.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,219.90 Up $12.10
• Silver, $17.25 Up $0.16
• Platinum, $978.50 Up $3.50
• Palladium, $774.80 Down $14.70

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