Gold Silver Market Report 26 April 2017

Fundamentals and News^*

Trump’s Tax Cut Proposal Increases Wedge Between Gold and Copper

Speculation about President Donald Trump’s proposed tax cuts is expanding the wedge between the precious and industrial metals.

Gold futures posted their biggest two-day loss in seven weeks amid optimism that a possible plan to cut the U.S. corporate tax rate to 15 percent from 35 percent will boost company earnings. An improving outlook for the U.S. economy is also bolstering the demand prospects for industrial metals used in iPhones, refrigerators and electrical wiring. The 120-day inverse correlation between gold and copper is at the biggest since 2003.

Bullion rallied this year, helped in part by delays in Trump’s pro-growth agenda, tensions between the U.S. and North Korea, and political uncertainties in Europe. With Trump’s team preparing to lay out the details of the tax plan, Goldman Sachs Group Inc. expects the gold sell-off to continue over the near-term as borrowing costs rise and U.S. and global growth looks solid.

“Reports that Trump would propose a sharper-than-expected corporate tax cut have helped to boost U.S. stock prices, which may be helping copper” and curbing gold’s appeal, Tai Wong, a director of commodity products trading at BMO Capital Markets, said in an email.

Gold futures for June delivery declined 0.8 percent to settle at $1,267.20 an ounce at 1:41 p.m. on the Comex in New York, taking this week’s losses to 1.7 percent, the biggest two day slump for a most-active contract since March 3.

Bullion’s fall has also helped spur a sell-off in producers of the metal. A gaugeof 15 big global gold miners tracked by Bloomberg Intelligence fell 3.5 percent, poised for the biggest decline since Dec. 15. Barrick Gold Corp., the world’s largest bullion producer, led declines among miners, slumping 10 percent after missing estimates on earnings and production.

Copper futures for July delivery gained 1 percent to $2.591 a pound on the Comex, after touching $2.5985, the highest in a week.
(*source Bloomberg)
 

Data – Forthcoming Release

Technical Outlook and Commentary: Gold

Gold for Spot delivery was closed at $1264.13 an ounce; with loss of $12.18 or -0.96 percent at 1.00 a.m. Dubai time, from its previous close of $1276.31

Spot Gold technically seems having resistance levels at 1283.6 and 1290.5 respectively, while the supports are seen at $1261.10 and 1254.10 respectively.

Technical Outlook and Commentary: Silver

Silver for Spot delivery was closed at $17.60 an ounce; with loss of 0.33 cent or -1.87 percent at 1.00 a.m. Dubai time, from its previous close of $17.93

The Fibonacci levels on chart are showing resistance at $18.12 and $18.31 while the supports are seen at $17.54 and $ 17.35 respectively.

 

Resistance and Support Levels

Indications only, open & closing prices are bids; data source: Bloomberg; important disclaimer below; Times as per Dubai

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