Market Overview: The gold market is trading flat in early action today while silver moves slightly higher. Markets may be in somewhat of a holding pattern as the highly anticipated vote on the bill to abolish the Affordable Care Act will take place today. The gold market may also potentially be vulnerable to some profit taking after rallying about $50 per ounce from its pre-FOMC lows.
Key Data Points: The latest reading on Durable Goods Orders showed a gain of 1.7 percent coming in higher than consensus estimates of a 1.5 percent rise.
There will be numerous Fed officials speaking today at various engagements.
The big story of the day will be the vote on the Affordable Care Act, otherwise referred to as Obamacare. The vote was scheduled for yesterday, but was postponed by the Republicans as there were serious doubts about the party having the necessary votes to pass the bill.
President Donald Trump appeared frustrated, and suggested that the vote should take place Friday or he would simply move on to other orders of business. This vote seems to be a crapshoot at this point, and it does have the potential to have a significant impact on markets.
A “no” vote could potentially have far-reaching consequences for the administration. Failure to repeal Obamacare could be significant, as it was a major issue during the administration’s campaign. It could also potentially make the passe of Trump’s other policies more difficult.
A “no” vote would likely boost the metals, as stocks may come under pressure and investor sentiment could potentially be affected.
Outside Markets: Stocks are moving higher in early trade today as bonds and the dollar are basically flat.
The Big Picture: Today’s vote on Obamacare could be very significant. The rally in equities has taken place on the notion of big changes from the Trump administration. If serious doubts about the administration’s ability to pass legislation start to take hold, equity markets could potentially begin to see some serious profit taking and a large sell off could be in the cards. Any major pullback in stocks or a major shift in investor sentiment would likely be supportive of gold. The gold bulls will look to take out the market’s recent highs in the coming days, and a successful breach above those levels could set the stage for another leg higher in the recent rally.
