Market Overview: Gold and silver are under some pressure again today as risk appetite remains high and economic optimism detracts from the appeal of perceived safe havens such as gold and silver. This will likely be the first losing week of 2017 for the yellow metal, which got off to a solid start to begin the New Year. Now that the Trump administration has taken over, investors may be cheering on recent actions taken by the President. Trump has thus far signed numerous executive orders, including orders for the Mexico border wall and pulling the U.S, out of the Trans Pacific Partnership trade pact.
Key Data Points: In perhaps the biggest data release of the trading week, GDP for the fourth quarter came in below expectations at 1.9 percent. Consensus estimates were looking for a 2.2 percent reading. Although the data had numerous positives, the wider trade deficit was likely a major drag. This weaker than expected reading could potentially make the Fed think twice about the timing if its next rate hike.
The latest reading on durable goods orders also was a disappointment, as durable goods orders declined by .4 percent last month. A drop in defense-related equipment accounted for the unexpected decline.
The latest release on Consumer Sentiment showed a reading of 98.5, indicating very strong sentiment.
Outside Markets: In quiet trade thus far, stocks and crude oil are moving slightly lower while the dollar index and bonds move slightly higher.
The Big Picture: Gold may simply be seeing some profit taking on recent upside, although the yellow metal could potentially see further pressure next week if stocks continue their recent ascent and risk appetite remains elevated.
The Trump administration has sprung into action, and its follow through on some issues likely has investors feeling more encouraged about its economic plans. For the time being, the path of least resistance for stocks and interest rates remains higher. Gold and silver will likely get to a point where some type of bullish catalyst is needed to see further, sustainable upside.
Gold could potentially, however, see capital inflows for diversification purposes and the notion of rising inflation. The yellow metal may also potentially see buying interest on some degree of risk aversion, as the potential for geopolitical rifts in the coming months exists.
If gold is unable to hold a large portion of recent gains, however, the bears would likely be in firm control and a retest of last month’s lows could potentially be seen.
