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Gold Inches Higher After Inflation Data, Tillerson Departure – Wall Street Journal

Gold Inches Higher After Inflation Data, Tillerson Departure – Wall Street Journal

Release Date:  Friday, March 16, 2018

Gold Inches Higher After Inflation Data, Tillerson Departure – Wall Street Journal
With another White House official departing, political uncertainty is boosting gold.

“Gold prices rose Tuesday, boosted by a weaker dollar and lower Treasury yields after data showed U.S. consumer prices rose moderately in February and President Donald Trump said he would nominate Mike Pompeo, director of the Central Intelligence Agency, to replace Secretary of State Rex Tillerson.

“Data Tuesday showed the consumer-price index, which measures what Americans pay for everything from shampoo to hotel stays, rose 0.2% in February after rising a seasonally adjusted 0.5% in January. In the year to February, overall prices rose 2.2%, the largest annual increase since November but slightly below expectations. Excluding the volatile food and energy categories, core prices were up 1.8% on the year.

“Some investors had feared recently that the Federal Reserve would raise interest rates four times this year as inflation picked up, after previously projecting three increases.

“The central bank is widely expected to raise rates at its meeting next week, but any sign that there is hesitation to raise rates four times could support gold and other assets that struggle to compete with yield-bearing assets like Treasurys as borrowing costs rise, said Bob Haberkorn, senior market strategist at RJO Futures.

“’Anything less than that would be very bullish for gold if we get any indication that’s the case,’ Mr. Haberkorn said.

“The news that another White House official is departing was boosting gold by adding to political uncertainty, Mr. Haberkorn said. Many investors buy the precious metal to protect themselves against a downturn in markets.

“A weaker dollar was supporting gold by making it cheaper for overseas buyers. The WSJ Dollar index, which tracks the U.S. currency against a basket of 16 others, was down 0.2%.

“Although gold is only up 1.5% this year coming off its best year since 2010, some investors think a weaker dollar, higher market volatility and broader economic concerns if protectionist trade policies disrupt growth could lift prices more moving forward.

“’When you put these together, can you go through 2018 without some of this coming the gold trade’s way? I don’t think so,’ said Trey Reik, senior portfolio manager at Sprott Asset Management.

“Among base metals, front-month copper for March delivery edged up 0.5% to $3.1190 a pound. Prices have fallen 4.9% this year on worries that demand from China, the world’s largest consumer, might slow, but some analysts expect steady economic data and supply disruptions to boost the industrial metal as the year goes on.” (“Gold Inches Higher After Inflation Data, Tillerso Departure.” Wall Street Journal 03.13.18)

PRECIOUS – Gold Flat Amid Rising U.S. Protectionism Fears - Reuters
Fear is sparked and stocks dip while the spot price of gold goes up.

“Gold prices were flat on Wednesday, hovering near a one-week high on a weaker dollar following U.S.
Secretary of State Rex Tillerson's sudden dismissal, which invigorated concerns of protectionist policies hampering global risk appetite.

“On Tuesday, President Donald Trump fired Tillerson after a series of public rifts over policy on North Korea, Russia and Iran, replacing his chief diplomat with loyalist CIA Director Mike Pompeo.     

“Risk aversion is back on the table following the unexpected news of Tillerson's dismissal and the appointment of Pompeo, said OCBC analyst Barnabas Gan.

"’Pompeo is a supporter of Trump's trade policy and could help advance his agenda of imposing it on U.S. trading partners ... all this uncertainty and risk aversion leaves gold as a safe haven option,’ Gan added.

“The U.S. dollar wallowed against the yen and other major currencies after the dismissal of Tillerson. This killed off an earlier bounce in the currency.      

“A weaker dollar makes bullion, which is used as an alternative investment during times of political and financial uncertainty, cheaper for holders of other currencies.  

"’With the U.S. protectionist rhetoric likely to ring equity market alarm bells, gold should continue to be an ideal hedge in this highly unpredictable environment,’ said Stephen Innes, APAC trading head at OANDA.” (“PRECIOUS – Gold flat amid rising U.S. protectionism fears.” Rueters 03.13.18)

It’s The 9th Inning of The Bull Market – And There’s No Chance Of Extra Innings, David Rosenberg Warns - CNBC
With Wall Street embracing the Nasdaq’s return to all-time highs, Gluskin Sheff’s David Rosenberg is strengthening his bear case for stocks.

"’What I'm seeing is the makings of a double top in the stock market,’ the firm's chief economist and strategist said Monday on CNBC's ‘Trading Nation.’ ‘We are in basically the ninth inning right now, and it's not going into extra innings. So I say, you don't play the momentum.’

“During an appearance on CNBC in June, Rosenberg was concerned investors were taking on a lot more risk than they know by pouring money into U.S equities.

“Rosenberg believes more pain is coming.

"’The markets are not telling you that we're in a new bull phase. They're telling you that we've gone back close to the high end of the range,’ he said. ‘My sense is that we're going to roll off the high end of the range, and go back and retest the low end of the range.’

"’These people that are telling you to play momentum and to throw valuations in the dustbin? I got to tell you, I've been in this business for 30 years, I hear that close to every market top. You want to do the exact opposite right now, and you don't want to be the pig that gets slaughtered,’ Rosenberg said. ‘This is the ideal time when the markets rally to take some profits off the table.’

“According to Rosenberg, the signals are flashing late cycle. So, it'll pay for investors to act more cautious.

“For investors who don't want to move entirely to cash, he recommends areas of the market that have been laggards.

"’I'd be more prone to getting out of these very whippy and flashy growth stocks and moving more towards value,’ he said.” (“It’s the 9th inning of the bull market – and there’s no chance of extra innings, David Rosenberg warns.” CNBC 03.13.18)