Gold Prices Retreat As Markets React To U.S. Senate Passing Major Tax Cuts
(Kitco News) - Gold fell to Friday’s pre-rally levels during the opening hours of the Asian trading session on Monday following the news that the U.S. Senate approved a major tax overhaul on Saturday.
In contrast, the U.S. dollar index rose in reaction to the news, trading up 0.20% at 93.08.
The U.S. Senate on Saturday approved a tax overhaul, which moved President Donald Trump’s promise of a major tax reform one step closer to reality.
If successful, this would be the largest tax reform since the 1980s, with Republicans planning to finance this project by adding about $1.4 trillion over 10 years to the $20 trillion national debt to boost the U.S. economy.
Trump spoke in support of the U.S. Senate vote on Saturday, saying that this will be a “tremendous tax reform,” promising that “people are going to be very, very happy.”
The Senate passage was the biggest hurdle for the “entire tax reform process,” said Japanese brokerage and investment firm Nomura. “We now expect full passage of the tax bill by year end,” the firm said in a note to clients.
In the latest comments from government officials, the U.S. Senate Republican leader Mitch McConnell said that the Senate and House of Representatives will be able to reach a conference agreement on tax legislation.
“We’ll be able to get to an agreement in the conference. I’m very optimistic about it,” McConnell told ABC on Sunday.
The effects of the tax reform will "likely modestly boost real GDP growth in 2018 by a few tenths," Nomura pointed out, adding that “the corporate rate cut delay to 2019 could shift some growth into later years.”
Some of the key events to watch for later today include a speech by the Governor of the Bank of Japan Haruhiko Kuroda, Japan’s consumer confidence report, the U.S. factory orders release and the American durable goods data reports.