Maybe Trump Is Long Gold
(Kitco News)- President Trump stopped the gold bears in their tracksyesterday after musing that he was not happy with the Fed's policies of raisingrates. The dollar was slammed and gold quickly bounced $10 higher. Now, youwould argue that the Fed is independent and President Trump's musings wouldhave no impact on Fed policy and this is merely a reaction to an oversoldcondition and the comments spooked the shorts. But it may be the beginning of abigger policy, whereby the U.S. wants to drive the dollar lower to make U.S.goods less expensive and offset some of the damage caused by reciprocal tariffsbeing proposed by our trading partners. The trade war issues have not beenfully priced into the financial markets, as most analysts continue to believethat the U.S. position is more one of posturing than execution. The lesson ofyesterday was how closely the gold market is marching to the tune of the dollarand how vulnerable the dollar is to any suggestion that the Fed may back off. Volatility will remain with us until theelections in November. Technically, gold holding above the $1,220 level willgive some relief to the bull camp.
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