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Gold Mixed as Investors Comb Through Trump Tax Plan, Expect Rate Hike

September 29, 2017 at 14:08 by Andrew Moran

Gold futures are mixed at the end of the trading week as traders comb through US President Donald Trump’s tax reform plan and try to price in an increase to interest rates. The yellow metal is on track for a weekly decline, primarily due to investors diving back into equities over the last two trading weeks.

December gold futures rallied $0.20, or 0.02%, to $1,288.90 per ounce at 14:00 GMT on Friday. The precious metal is poised for a modest weekly decline of 0.50%, but is poised for a 3.5% quarterly jump.

Silver, the sister commodity to gold, is bleeding red ink at the end of the trading week. November silver futures dipped $0.08, or 0.52%, to $16.76 an ounce. The white metal is set to post a 0.07% weekly drop, but it is also about to record a 2% quarterly gain.

The precious metals are mixed on Friday because investors are beginning to weigh the president’s tax plan, the Federal Reserve’s upcoming rate hike, tepid economic data, and a weakening US dollar.

On Thursday, the Trump administration unveiled its tax reform initiative, which includes decreasing the number of tax brackets from seven to three, giving several groups tax hikes or tax cuts, and ensuring the wealthy would not receive a personal exemption. Overall, the administration argues that the tax changes simplify the tax code and will spur economic growth.

Consumer spending climbed 0.1% in August, but when it is adjusted for inflation, spending actually declined for the first time since January. Personal income levels rose 0.2%, beating initial forecasts.

Precious metals received some help as the US dollar slipped 0.09%. A weaker US dollar is good for commodities like gold and silver because it makes it cheaper for foreign investors to purchase.

The market is also preparing for the US central bank to pull the trigger on one more rate hike sometime this year, potentially at December’s Federal Open Market Committee (FOMC) meeting. Fed Chair Janet Yellen confirmed that the Fed would raise rates one more time, while also unwinding the $4 trillion balance sheet.

North Korean tensions and the recent German election results seem not to be affecting gold prices on Friday.

If you have any questions and comments on the commodities today, use the form below to reply.

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