Gold has edged higher in the Monday session. In North American trade, gold is trading at $1254.84 per ounce. On the release front, there are no economic indicators in the US. We’ll hear from two FOMC members – Charles Evans and Robert Kaplan. There are no US indicators until Tuesday, with the release of CB Consumer Confidence.
Donald Trump’s stunning ascendancy to the presidency last November triggered an impressive rally by the US dollar. However, market euphoria over Trump’s election win is long past. The inquiry into the Trump administration’s links with Russia continues to make headlines, and is another cause for concern for nervous investors. Trump has been in office for over two months, but he has yet to provide any details over even an outline of economic policy. Last week, Trump’s proposed bill to change Obamacare was not even voted on, as the White House was unable garner enough support to pass the bill. This latest setback for the beleaguered Trump administration could increase market jitters and send the US dollar to lower levels.
Gold prices are sensitive to rate moves, so investors continue to look for clues about what the Federal Reserve has planned for the remainder of 2017. The Fed’s rate statement and dot plot indicated that the Fed is looking at another two hikes in 2017, which would make three in total. This forecast was reiterated by Chicago Fed President Charles Evans earlier this week. Although one could make a strong case that three rate hikes in 2017 would be impressive, the markets appear disappointed, and would like four hikes, given the strong performance of the US economy. The Fed’s cautious approach has reduced investors’ appetite for risk, which has been good news for gold, a safe-haven asset.
