Market Overview: Gold and silver are both getting a boost this morning as some risk aversion sets in and some data points to increasing inflationary pressures. The big story is the immigration ban implemented through executive order by President Donald Trump. The order has been the subject of significant criticism from domestic business leaders as well as many global leaders. The uncertainty surrounding the order and other potential actions the President could take are likely a factor in today’s buying in gold and selling in stocks.
Key Data Points: Personal Income and Outlays this morning showed a moderate rise of .3 percent in personal income while consumer spending saw a rise of .5 percent. Inflation data continues to point to rising prices and levels approaching the Fed’s 2 percent target.
The Pending Home Sales Index showed a rise of 1.6 percent in December, just above the top end of consensus estimates.
The Dallas Fed Manufacturing Survey showed a reading of 11.9.
Gold investors will also be watching the Fed meeting this week for any clues as to the timing and pace of further rate hikes.
Outside Markets: Stocks are seeing their worst day in some time today, as investors are anxious over Trump’s immigration ban and corporate earnings. Whether or not this is simply a pullback or the start of a larger correction remains to be seen, however, ongoing protests over the immigration ban and vocal concern from other world leaders could fuel more risk aversion.
The dollar index is trading slightly lower this morning as of this post, and bonds are just moving into positive territory.
The Big Picture: The recent immigration ban has set into motion a great deal of uncertainty and disagreement. Unfortunately, this issue is not likely to go away anytime soon, either. Several World leaders have voiced their opinions on the ban, while many prominent U.S. Government officials have also expressed deep concerns. With a severely divided country, this could be just the beginning as the Trump administration looks to follow through on what it campaigned on. The issue of refugees and the Mexican border wall are just two of the issues that will be at the center of attention, and a lack of compromise between government officials could potentially drive investor anxiety and fuel risk aversion further.
Gold may potentially see higher prices based on risk aversion, and even with rising rates may not fall too far given the current geopolitical environment.
