HSBC: Gold Likely To Wait For Trump Signal Before Next Big Move
Thursday January 19, 2017 10:08
The nature and direction of U.S. President-elect Donald Trump’s economic policies are still not clear and may yet impact Federal Reserve policy and gold, says HSBC. “According to traditional macroeconomic theory, large tax cuts and infrastructure spending would likely – all things being equal – accelerate the pace of projected rate hikes,” the bank says. “This would help prevent the economy from overheating. But Mr. Trump may not deliver the fiscal stimulus that markets expect. Senior Republicans in Congress may not endorse substantial increases in infrastructure spending.” At the last Fed meeting, about half of the attendees incorporated a fiscal boost of some kind into their economic forecasts, while others suggested the Trump administration’s policies could harm growth longer term, HSBC points out. “Uncertainty levels are still high and the Fed will be concerned about the possible imposition of trade barriers and currency disputes,” HSBC says. “So, while rate increases look possible and will weigh on gold, there should still be enough uncertainty to prevent too sharp a correction. The gold market may therefore take its next cue from any indication given by Mr. Trump and his aides as to the precise nature of his economic policies.”
By Allen Sykora of Kitco News; asykora@kitco.com
Commerzbank: ETF Gold Holdings Hint At Investor Concerns
Thursday January 19, 2016 10:08
Exchange-traded-fund gold holdings hint at investor concerns about political risks in Europe, says Commerzbank. “Gold ETFs saw strong inflows last week, particularly those in Germany, Great Britain and China,” the bank says. “With inflows equating to 4.4 tonnes, the Germany-listed Xetra-Gold ETF reported the most pronounced inflows of all gold ETFs. The ETF changes registered last week may already give us some clue as to the direction in which investors there may be thinking about fleeing given the growing political risks in Europe and possible turmoil in China – something the IMF (International Monetary Fund) also warned about recently. German and Chinese gold ETFs already constituted an anomaly in the fourth quarter of 2016 when they were actually able to gain slightly despite marked worldwide outflows.”
By Allen Sykora of Kitco News; asykora@kitco.com
