Why US Debt Growth Is Positive for Long-Term Gold Prospects
Many market participants are expecting debt to rise substantially under President-elect Donald Trump, who’s determined to cut taxes and increase fiscal spending.
President-elect Donald Trump is known for his tough talk on trade policies. He’s mentioned that he’ll put trade agreements in place to improve terms for American workers.
Outflows from ETFs led to a ~28% fall in gold prices in 2013. Such a fall is the equivalent of selling 881 tons of gold.
India and China constitute ~50% of the global demand for physical gold. When gold prices are falling, physical gold-buying in these markets provides support.
The stock market has scaled great heights following Donald Trump’s presidential win. This activity, however, has also led to the question of whether the market is due for a correction.
The US dollar has remained strong since Donald Trump won the US presidential election, but in the second week of January 2017, the dollar weakened.
On December 14, 2016, the Federal Reserve finally raised interest rates by 25 basis points. More concerning is the Fed’s targeted total hike of 75 basis points in 2017.
2017 will be a crucial year for Europe as several countries go to the polls. The first of a series of elections will begin in the Netherlands in mid-March.
While President-elect Donald Trump’s win has led to pressures on gold prices, his inflationary policies could boost gold demand.
The US jobs report showed 156,000 job additions in December 2016. This number was below the consensus estimate of 175,000 job additions.
Gold traded at $1,202 per ounce on Monday, January 16, 2017. Gold futures for February expiration were almost 0.50% higher than the previous day’s close.
On Wednesday, the US dollar index, which tracks the dollar against a basket of six major world currencies, fell 0.4%.
The continued turmoil in the markets in 2016 was one of the major determinants of precious metal prices.
Gold’s closing price on Wednesday, January 11, hit its highest in the last seven months.
Price changes for precious metals have been dependent on economic data. Economic numbers on Friday, January 6, 2017, had an impact on precious metals.
US economic numbers have an impact on rate hikes, which in turn play a significant role in the price determination of gold and other precious metals.
Gold prices fell on Friday as compared to the previous day.
Gold suffered a great deal in November and December mainly due to the speculation of rising interest rates and the surge in the US dollar.
Market participants are waiting for the Eurozone inflation numbers and survey data from the UK manufacturing, service, and construction sectors.
Investors were somewhat pessimistic about gold during the last quarter of 2016. Most of the fluctuations were due to the news of the interest rate hike.