Market Overview: Both gold and silver are seeing some selling today as some profit taking is likely being seen and as risk appetite remains elevated. A pullback in the metals would come as no surprise, after the metals posted the highest prices in months. Stocks have carved out fresh all-time highs, as President Trump has indicated that his administration will be rolling out a new tax plan in the coming weeks. This may potentially provide investors with a breath of fresh air, as issues surrounding the recent immigration ban as well as ongoing questions regarding ethics and Trump’s business interests have remained a source of debate.
Key Data Points: In a light day in terms of data, investors will get the latest reading on Consumer Sentiment later this morning. The indicator will likely remain on the high side, as investors continue to remain hungry for risk and as economic optimism remains elevated.
Outside Markets: The idea of a new tax plan that will lessen the tax burden for individuals and businesses alike was enough to throttle stocks to fresh all-time highs in recent trade. With fresh highs being made, even more capital could potentially find its way into equities, and a fresh leg higher in stocks may be seen.
Bonds have seen some selling in the last couple of sessions and risk appetite remains high and interest rates rise.
The dollar index has is on the offensive once again, and has pushed back above the 100 level. Although the greenback remains a ways from its post-Trump election victory highs, the dollar could see further strength on a fresh tax plan and further signs of inflation. A run at the dollar’s recent highs may also get the attention of gold and silver investors, and could possibly weigh on prices.
The Big Picture: For now, risk appetite remains robust and stocks appear to be headed for a fresh leg higher. This could potentially weigh on gold and silver prices, and the recent rally in these metals may see a significant test if stocks continue their ascent.
Of course, given some of the issues surrounding the Trump administration, investor sentiment could potentially change in a hurry. Investors will want to see a solid tax plan in the near-future, and will also want to see the administration’s plans on fiscal spending.
A lack of progress on these plans could potentially derail the stock rally, and a sell-off could possibly drive capital flows into alternative asset classes.
