Market Overview: Both gold and silver are moving slightly higher in early action today. All eyes are on Washington today as Donald Trump will be sworn in as the nation’s 45th President. Markets have been largely driven by the Trump election victory back in November, and investors will be eager to see what the new administration is able to accomplish. Some markets have come a long way in a short period of time, and it is possible markets either see a pullback or simply trade sideways until more clarity on the new administration’s policies is seen.
Key Data Points: There are no major economic reports scheduled for release today. Two Fed officials will be speaking, however, at various engagements.
Outside Markets: Stocks are moving higher today as optimism over the economy and new administration fuels buying. Equities remain not far from recent all-time highs, yet have also shown some signs of fatigue in recent weeks. The stock market has covered a lot of ground in just a few weeks, and a pullback could be seen before further upside. Investors may also elect to take a wait-and-see approach as the new administration takes office today.
After seeing a recent rebound, interest rates have been on the rise again in recent action and bonds are being sold off again today. The idea of three rate hikes or possibly even more may keep rates moving higher, and robust appetite for risk may also keep bonds and notes under pressure.
After seeing a pullback, the dollar index is holding firmly above the 100 level. The notion of higher interest rates may keep the dollar well-supported, as other nations such as the EU continue with ultra-low interest rates and even QE. Recent dollar strength has likely been a thorn in the side of gold investors, but thus far the yellow metal has gotten the year off on the right foot despite the dollar index trading at the highest levels in many years.
The Big Picture: Although the Fed and monetary policy will certainly play a role in gold and other markets this year, the major theme investors are likely to be focused on is the new Trump administration. Markets have made significant moves based on the notion of lower taxes and fiscal spending, but investors are still awaiting further details about the implementation of these economic policies.
Markets will likely give the new administration the benefit of the doubt for the first few months but at some point will want to see concrete progress being made.
