Gold Prices Slump as Tax Cut Hopes Revive the Trump Trade

Cassie Bastien

2/10/2017 9:59:00 AM

Daily Gold & Silver Market Report – 02/10/2017

• Gold prices plummet as tax cut hopes revive “Trump trade”
• White House news-flow may overshadow consumer confidence data

Ilya Spivak, Senior Currency Strategist with DailyFX, reports, “The so-called “Trump trade” staged a forceful comeback after the White House said it will announce the most ambitious tax reform plan since that of Ronald Reagan in the coming weeks. The U.S. dollar rose alongside Treasury bond yields on hopes that cut in corporate rates will boost growth and inflation, pushing the [Federal Reserve] into a steep rate hike cycle.” As expected, spot Gold prices dropped following this announcement. Investor sentiment is expected to be slightly down for the first time in four months. Spivak said, “News-flow from Washington, DC may overshadow other considerations just as the vaguest hint of tax reform bewitched the markets despite rather cautious comments from the Fed’s Jim Bullard and Charles Evans. … Gold prices put in a bearish engulfing candlestick pattern, hinting a turn lower may be ahead.”

Silver Market Set Up For Much Higher Price Move than Gold

• Precious Metals investors purchased five times more Silver ounces, than Gold ounces from 2010 to 2016.

SRSroccoreport believes Silver prices will see much higher gains than Gold once the paper markets collapse because Silver has seen more pressure from Precious Metals investment demand than has Gold. While the Silver market will continue to supplement the ongoing annual deficits with old Silver stocks, this supply is not endless.  Additionally, the stock market rally driven by President Donald Trump also cannot last forever. SRSrocco said, “The last time the stock market crashed 2,000 points in the beginning of 2016, investors flocked into Gold and Silver in a big way. … Precious Metals investors need to look at buying and holding Gold and Silver the same way an individual puts money away each month in their 401K, pension plan or retirement account.”

Bonds Slump as Dollar Boosted by Trump Tax Pledge

BloombergMarkets reporter Natasha Doff said U.S. bonds fell while the dollar rose, for its first weekly gain of the year, as “reflation trades came back into focus after a promise by President Trump to overhaul business taxes.” Crude oil prices extended a recent rally as output cuts from OPEC and other oil-producing nations are clearing a global inventory glut. Doff said, “The tax pledge rekindled optimism that Trump will focus early on in his presidency on the pro-growth policies he promised during his campaigning. Trump said a “phenomenal” plan to overhaul business taxes may be released within the next few weeks.” In a Bloomberg Television interview Friday, JPMorgan Asset Management Global Market Strategist Michael Bell said, “The obvious implication is that bond yields go higher.”

At 10:59 A.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,232.70 Down $5.20
• Silver, $18.00 Up $0.17
• Platinum, $1,002.30 Down $18.90
• Palladium, $786.30 Up $12.30

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EDT)! Or call us Fridays until 6 p.m. (EDT)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.