Gold Rises As Pros Become More Bearish
(Kitco News) - Gold continues to rise against the backdrop of noted analysts aggressively voicing bearish calls. The argument rests solely on the premise that U.S. rates will ratchet up dramatically in 2018,supporting a much stronger dollar and thus the demise in gold. The assumption ignores what higher rates will do to debt servicing but many have had Trump’s Kool-Aid and believe that this will be more than offset with growth accelerating and the added tax revenues will mitigate the budget impact. If the scenario plays out, I agree with their conclusion. But you have to take this view in total isolation. Ignored are the geopolitical issues, North Korea, Iran, Catalan. Ignored is the fact that the administration has been unable to pass any meaningful fiscal policy. Ignored is the fact that the Republican Party is splintered with senior party members and cabinet members openly voicing disdain for the President. Even within the Fed there is disagreement on how aggressively tightening should occur and Yellen’s replacement is likely to be more dovish. Big buck analysts: higher rates = higher dollar = lower gold. Wish it was that simple. The technical picture remains constructive with support at $1,288. A test of the $1,300 print is in play.