Opinion with Peter Hug
Maybe Trump Is Long Gold
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
(Kitco News) - President Trump stopped the gold bears in their tracks yesterday after musing that he was not happy with the Fed’s policies of raising rates. The dollar was slammed and gold quickly bounced $10 higher. Now, you would argue that the Fed is independent and President Trump’s musings would have no impact on Fed policy and this is merely a reaction to an oversold condition and the comments spooked the shorts. But it may be the beginning of a bigger policy, whereby the U.S. wants to drive the dollar lower to make U.S. goods less expensive and offset some of the damage caused by reciprocal tariffs being proposed by our trading partners. The trade war issues have not been fully priced into the financial markets, as most analysts continue to believe that the U.S. position is more one of posturing than execution. The lesson of yesterday was how closely the gold market is marching to the tune of the dollar and how vulnerable the dollar is to any suggestion that the Fed may back off. Volatility will remain with us until the elections in November. Technically, gold holding above the $1,220 level will give some relief to the bull camp.