Senate Passes Budget Bill; Equities Higher
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Thursday night the Senate passed the budget bill, freeing up the opportunity for tax cuts. The marketâ€™s initial reaction is very bullish, pushing equities to record highs while putting pressure on the metals. Gold has given back Thursdayâ€™s gains and is now testing the $1,280 level again. Silver is giving back half of Thursdayâ€™s gains but remaining resilient.
What does the possibility of tax reform mean for the metals? The passage of the vote has put pressure on bond futures, meaning rates are rising, which could put pressure on gold and silver. Tie in the stronger dollar, which is also a negative for the commodity space.
We will be on the other side of that trade looking to buy commodities, especially gold and silver if they hold their key levels of $1,280 and $17. The relationship between interest rates, the dollar and commodities has changed because of financial engineering. Central banks and the Fed have lost control, which will be positive for the metals, and the impending market correction will also drive metals higher.