However, the Trump trade has been losing momentum giving renewed focus on those market segments that sold-off during the so-called “Trump bump.” Concerns over Trump’s fiscal stimulus policies and his administration’s friction with traditional allies supported bullish bets on gold.
Lingering concerns over Trump’s policies, coupled with overseas political risks from upcoming elections in European countries, may continue to support safe-haven plays in gold.
Any more struggles from the federal courts over Trump’s executive orders, notably his order on immigration, could also set precedence for further challenges to Trump’s orders down the road, which could further support gold as a safe-haven asset.
Moreover, uncertainty about the pace of rate increases may help purchases of of the metal as a short-term safe haven. Comments or lack of comments out of the Federal Reserve has caused some observers to anticipate the central bank will not raise interest rates three times in 2017, which Fed officials had previously promised in December if they thought it would be appropriate.
The lower-for-longer rate environment will dampen the outlook on the U.S. dollar and keep yields depressed, which may both benefit gold as a store of wealth. The USD-denominated gold bullion grows more expensive for foreign buyers when the dollar appreciates, and the non-yielding gold hard asset is less attractive to other fixed-income assets in a rising rate environment.