Gold Prices Slip as Market Awaits U.S. Healthcare Vote

Cassie Bastien

3/24/2017 12:53:19 PM

Daily Gold & Silver Market Report – 03/24/2017

The dollar rose, pushing Precious Metal prices downward, as many investors await results of the healthcare reform being pushed by President Donald Trump. Reuters reported, “A rough ride for the healthcare plan could affect Trump's efforts to cut taxes and boost infrastructure, with the potential to drive more investors to Gold as a safe-haven if stock markets fall.” One Precious Metals trader said, “If the healthcare vote is to pass the reforms, Gold could face pressure. But, if it encounters problems, we might chase a previous high at around $1,260 [per ounce].” OANDA Senior Market Analyst Jeffrey Halley said, “We suspect that short-term long positioning has become extended and may be vulnerable to a correction.”

How Volatility Affects Silver Prices

One of the reasons, if not the main reason, why Silver is more volatile than Gold is simply because it is cheaper, which allows investors to buy in without providing a substantial amount of money up front. But to be honest, Market Realist Reporter Meera Shawn said, “The overall market volatility depicted below by the Volatility Index has been trending downward since the beginning of 2017.” However, Silver prices have actually been trending upward and investors are expecting that to continue in the coming months. Shawn even said, “The medium-term outlook for Silver is positive and could touch the $20 [per ounce] mark.” Precious Metals in general are strongly influenced by the U.S. dollar, being dollar-denominated assets. Silver, although not always a hedge against volatility, is definitely a hedge against the falling currency market.

Is Wall Street Losing Faith in Trump?

CNN Money reporter Matt Egan says, “This week's market tumble is evidence of how the ‘Trump trade’ that sent stocks and other risky assets booming after the election is showing serious cracks amid President Trump's struggles to push through a replacement for Obamacare.” In addition to other warning signs, the Dow Jones industrial average is on track for its worst month since January of 2016. Oil prices, small cap stocks and even banks are all “seeing red,” Egan said, simply due to the dollar plummeting to a four-month low against the Japanese yen. Michael Block, Chief Market Strategist at Rhino Trading, wrote in a note to clients Wednesday, “The bumbling on the health care bill has people losing faith in the Trump Bump.”     

• Cash fleeing to the safety of government bonds have lowered the 10-year Treasury yield down to 2.39 percent, a dramatic reversal from 2.62 percent just two weeks ago.
• Gold prices have soared 8 percent so far this year and CNNMoney's Fear and Greed Index has swung back into "fear" territory.

At 1:59 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,250.60 Up $0.80
• Silver, $17.82 Up $0.15
• Platinum, $970.70 Up $4.90
• Palladium, $813.60 Up $12.00

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