Commentary - Investor Centre

The Week Ahead In Gold

April 1, 2019/in Commentary, Market Updates/by Border Gold Corp.

Things are not always what they seem…The old saying could make a great deal of sense against the current economic and geopolitical backdrop. With the conclusion of the Mueller report now in the rear-view mirror, investors will again focus their attention on the bigger picture. They may not, however, like what they see.

The Federal Reserve and the path of monetary policy will be a primary area of focus in the months ahead. After the latest Fed meeting, markets are not expecting any further hikes from the Fed this year. Some Fed officials and analysts have, however, suggested that more hikes may still be appropriate. Although the economy remains strong, some cracks have begun to emerge that could potentially spell trouble for the globe’s largest economic engine.

Not only have rate hike expectations pretty much been thrown out the window, but there seems to be increasing talk of the Fed even starting to ease again. That is where things started to look far more interesting late last week. On Friday, White House Economic Advisor Larry Kudlow suggested that the Fed should cut rates by 50 bps “immediately.” Kudlow’s comments should not come as a surprise, as President Trump has been highly critical of the central bank and its rate hikes for some time. It has fueled some speculation, however, that perhaps the economy is not as solid as some think. Looser monetary policy could also potentially be used as a hedge of sorts if a trade agreement with China is not reached in the weeks or months ahead.

Despite the Fed’s increasingly dovish stance, the dollar index has continued on the offensive and has likely been a major factor in gold’s recent pullback. Several factors may continue to keep the greenback moving higher, as investors seek out its perceived safety and stability. Concerns over U.S./China trade talks, the uncertainty surrounding Brexit and even a change in tone from the ECB may all keep a bid in the U.S. currency.

The dollar is back at a multi-month high and could potentially be on the verge of an upside breakout. How much room the currency may have to run is unclear but further gains above recent highs may be limited. A resolution to any of the above issues could put some significant downward pressure on the currency and force a change in trend. A weaker dollar could give the gold bulls a breath of fresh air and fuel higher prices. If U.S./ China talks break down, or if a no-deal Brexit is set to take place, the flight to safety could be significant enough to propel gold higher despite a stronger dollar.

Markets will be watching the data stream closely in the weeks and months ahead as concerns over a major global slowdown mount. Key data points such as housing and manufacturing have shown measurable weakness in recent months, and the latest reading on consumer spending and inflation did nothing to alleviate those fears.

The significant economic slowdown along with benign inflation may allow the Fed, and even other central banks, to ease again if necessary. An extension of ultra-low rate policies could keep a floor under the gold market and other dollar-denominated assets.

In the meantime, gold has fallen back into its previous trading range and will likely find significant buying interest on any dips towards the range-bottom around the $1280 area. The gold bulls may simply be in a holding pattern until the next major buying catalyst comes along.

The Week Ahead In Gold

March 25, 2019/in Commentary, Market Updates/by Border Gold Corp.

The week ahead could be a doozy. On Friday, Special Counsel Robert Mueller III submitted his long-awaited report on Russian interference in the 2016 U.S. Presidential election. Mueller sent the report directly to Attorney General William Barr, who will now decide how much, if any, of the report to release to Congress and the American public.

Over the weekend, Barr reviewed Mueller’s report and communicated to members of Congress his primary findings: that there appeared to be no collusion between Trump, his campaign and Russia and that no conclusion was reached on whether Trump obstructed justice or not. The report, which was nearly two years in the making at a cost of over $25 million, is already being hotly debated. It is important to consider that Mueller made note in the report of the fact that while it did not show any crimes committed, it did not fully exonerate the President either. Democrats have certainly taken notice of this and other issues with the report and its rapid release by Barr, and a further showdown could be in store as Democrats call Barr or even Mueller to testify.

Markets are also grappling with an inverted yield curve, and investors sold stocks aggressively late last week as recession fears fueled risk aversion. The yield curve inverted for the first time since 2007 on Friday, and such a condition is considered a reliable recession indicator.

The yield curve inversion comes on the heels of another dovish Federal Reserve meeting. The central bank has now essentially removed any expectations for further rate hikes this year and has lowered its expectations for growth. The Fed clearly sees some substantial risks to the economy and the bond market is sending a signal that should not be overlooked.

Making the yield curve inversion even more concerning is the current state of monetary policy. Although the Fed had set out to “normalize” monetary policy and has been hiking the Fed Funds rate since 2015, current rates only stand at 2.25%-2.50%. Prior to the Great Recession of 2008/2009, the Fed Funds rate had been at 5.25%-5.50%. The central bank has considerably less room to work with this time around and may not be able to create the desired shock-and-awe effect of rapid rate decreases. The Fed’s balance sheet is also still full of assets, having peaked at about $4.5 trillion and currently sitting around $3.9 trillion. The central bank may be very reluctant to start up the printing presses again with QE4 given the already-swollen size of its balance sheet.

Adding to investor anxiety over the rising risk of recession is a recent lack of progress in U.S./China trade talks. Although recent rounds of talks between trade officials had been considered positive, they have still not led to a sit-down between President Trump and Chinese Leader Xi Jinping. A formal meeting may need to take place before the June G20 meeting in order to keep recent momentum going. With the Mueller investigation out of the way-at least for now-President Trump may find himself in a stronger position and China may have more incentive to reach a long-term agreement.

The Week Ahead In Gold

March 18, 2019/in Commentary, Market Updates, Market Updates/by Border Gold Corp.

The gold market is slightly higher in early trade Monday as a weaker dollar index gives the market a boost. Markets are fairly quiet across the board to start the new trading week as there was little news over the weekend to shake things up.

This week’s FOMC meeting taking place Tuesday and Wednesday will likely be a primary area of focus for investors. The Fed is not expected to make any changes to its current policy. Investors will, however, be looking for any clues about the central bank’s plans for the months ahead. The Fed has taken a decidedly more-dovish tone in recent months, and that dovishness has given stocks some ammunition as they attempt to embark on a fresh leg higher. Likewise, the about-face from the Fed has also given gold and dollar-denominated assets a lift. Although no major changes to the Fed’s current wait-and-see approach are expected at this time, any commentary from central bank officials alluding to a more aggressive approach could be market-moving.

Markets will also be looking for any fresh developments in the ongoing Brexit saga. Thus far, the U.K. has no “soft Brexit” deal in place ahead of the March 29th “hard Brexit” date. Prime Minister Theresa May is likely to present another deal before Parliament prior to that date, but it remains unclear if she will be successful in negotiating a deal. Brexit discussions have been taking place now for two and a half years, and the outcome remains up in the air. There is the potential for a lengthy delay, a disorderly exit without a deal, an exit using May’s deal or even another EU membership referendum. As the deadline for a deal approaches at the end of the month, any lack of progress could fuel a large degree of risk aversion and could again trigger significant market volatility and selling pressure as it did when Great Britain first voted to leave the EU.

The continuing U.S./China trade negotiations may also begin to fuel some risk aversion and volatility again in the weeks ahead. Investors had become increasingly optimistic in recent weeks after a series of talks between trade officials from both countries were deemed to be fruitful. That optimism may begin to fade quickly, however, as there is still no meeting set for U.S. President Trump and Chinese Leader Xi Jinping to sit down and formalize and agreement. Recent reports have suggested that such a meeting may not take place until June.

In other news, the CFTC recently reported that money managers have scaled back their bullish positioning in the gold market. The CFTC’s most recent “disaggregated” report showed managers cutting long positions from 31,247 the week prior to 17,407 as of March 12th. The rise in gross-short positions of over 11,000 contracts would seem to suggest that a wave of fresh selling hit the market. This long liquidation and fresh selling interest could be attributed to a variety of factors, although the market’s failure to maintain recent upside momentum was likely a major influence.

The Week Ahead In Gold

March 12, 2019/in Commentary, Market Updates, Market Updates/by Border Gold Corp.

Over the weekend, Fed Chairman Jerome Powell gave an interview to CBS’ “60 Minutes” in which the head central banker stated that President Trump cannot fire him. Although Powell avoided direct commentary regarding the criticism from President Trump on the Fed’s policy actions, he did seem to make clear that he intends to serve out his term basing monetary policy on the economy rather than political considerations.

Over the last two years since Trump took office, the economy has been firing on all cylinders, seeing the best gains since the recovery began a decade ago with nearly 3% growth for last year. Some recent signs of weakness, however, may be symptoms of a larger, global slowdown that could potentially derail U.S. growth. Last week’s jobs data which showed the U.S. added just 20,000 jobs for February would seem to ratify concerns over first quarter growth. In addition to significant weakness in key data points, investors must also consider the fading tailwinds from tax cuts and corporate stock-buybacks. Put another way, the stock market rally may now be on its last legs.

The growing concerns over U.S. and global growth make the timing of Powell’s interview somewhat interesting. After hiking rates four times last year, the Fed is now “on-hold” and could potentially stay on the sidelines for the rest of the year. Some have even begun making the case for the Fed to start lowering rates again this year, and with little inflation to speak of, such a scenario may be increasingly plausible if the data stream shows further weakness.

The Fed now seems to find itself in a corner with no simple solution. If the central bank elects to lift rates again later in the year, stocks and risk assets could again come under significant pressure. If the Fed elects to sit tight or cuts rates, the dollar is likely to see a significant decline. Either scenario could be highly bullish for gold and dollar-denominated asset classes.

The ongoing U.S./China trade talks appear to be headed in a positive direction and investors are hopeful a deal may be reached soon. The tariff war has put a dent into the economies of both countries, and an agreement being reached could set the stage for what may be the final rally in equity markets. Looking at the bigger picture, it is unclear if a deal will be enough to put upwards pressure on growth rates and many of the current weak points are likely to remain weak without central bank intervention.

With so much uncertainty surrounding trade and the global economy, the gold market has entered into a consolidation phase. The market has thus far seen buyers step in at key support levels around the $1280 area but has yet to mount another challenge higher. The market could potentially spend some time in its recent trading range until more clarity is seen on a potential trade deal and until the Fed provides more clues regarding its plans for rates.

The Week Ahead In Gold

February 25, 2019/in Commentary, Market Updates/by Border Gold Corp.

The gold bulls may have their work cut out for them this week as fading risk aversion pressures the market. It has been widely reported that the U.S. and China are nearing an agreement on trade to put an end to the tariff war that has been going on for months. The effects of the trade war have already been seen in both countries and a resolution has the potential to fuel a significant rally in stocks.

Although there are numerous details that still need to be worked out, it has been reported that China may commit to purchasing large amounts of U.S. agricultural and energy products while also removing barriers making it easier for U.S. companies to operate in China. The U.S. for its part, is reportedly looking at removing tariffs on $200 billion in Chinese imports. It has been suggested that a formal agreement could be reached by the end of the month.

A U.S./China trade pact could be viewed as a major victory for U.S. President Donald Trump. The Trump administration has made the restoration of a fair and equitable global trade marketplace a cornerstone of its policy agenda, and a deal could come at a great time for the administration. Trump recently left Vietnam empty-handed following an unproductive meeting with North Korean leader Kim Jong-Un. The Trump administration is also dealing with numerous legal and investigative issues including last week’s testimony from former Trump attorney Michael Cohen.

In addition to higher equities, the gold market may also have to contend with a stronger dollar. The greenback is moving higher today on trade optimism and could potentially see further upside later in the week as the ECB meeting gets underway. The Eurozone continues to grapple with a weak economy and could potentially cut its economic forecast while also signaling to markets that an initial rate hike may be further down the road than previously anticipated.

Despite some of the current headwinds, however, the gold market still has a lot of fundamentals working in its favor. A poor European economic outlook, an ongoing slowdown in the U.S. and China and the end of U.S. monetary policy-tightening could keep the yellow metal on an upwards trajectory.

The larger picture is also bullish for gold. The aging equity bull market will, at some point, conclude and investors will be forced to seek out alternatives. The U.S. debt load also recently hit over $22 trillion, and the government has again reached its credit limit. Although lawmakers could vote to raise the debt ceiling, yet again, there continues to be no concrete plans in place for how the massive debt load will be addressed. In fact, the threat of additional government shutdowns is likely to become a major area of focus as the fiscal situation deteriorates further. While it may not take place this year, next year or even in the years ahead, the U.S. will eventually be forced to deal with its massive debt burden. Although it remains unclear how the government might address the issue, it could have significant ramifications for the dollar and a significant currency debasement cannot be ruled out as a possible solution.

Although the 3.5-month uptrend in gold has now been negated, the metal is not likely to fall too far before finding significant buying interest. For the patient, big-picture investor, the current dip may represent an excellent long-term value.

The Week Ahead In Gold

February 19, 2019/in Commentary, Market Updates/by Border Gold Corp.

The last several weeks have seen some very encouraging signs for the bulls, and Friday’s session was no exception. Spot gold moved higher by nearly $9.00/oz despite some factors that would typically act as significant headwinds.

The dollar index was stronger on Friday to end the week. Although the currency wasn’t up a huge amount in percentage terms, the rally in gold even as the dollar rose was a breath of fresh air for the bulls. Many of the gold market’s largest net percentage gains or declines in recent months have been the direct result of large moves in the greenback.

Stocks were also higher Friday to cap off the week, and equities went out in dramatic fashion. The benchmark Dow Jones Industrial Average rose by nearly 444 points while the broad-market S&P 500 saw a gain of nearly 30 points. Equities saw strong buying interest as appetite for risk increased. Indications are that ongoing U.S./China talks over trade that took place last week in Beijing were productive and negotiators have now laid out a framework for further talks.

The price action seen in gold and other outside markets to end the week may be considered quite bullish for gold. The metal typically does not see significant strength in the face of a stronger dollar or sharply higher equity prices. Not only that, but the fact that gold was sharply higher despite strong investor appetite for risk may also be very telling.

The gold market is showing some undeniable signs of strength and is being bid higher with or without supportive outside markets. This can only mean one thing: that higher prices are likely ahead as demand strengthens. The recent strength in gold and current uptrend that has been in place for some time now may simply be further indication of an unfolding bull market.

The gold market could still face some obstacles in the weeks and months ahead. Stocks could continue to work higher again; the dollar could strengthen further, and investors may become increasingly comfortable taking on risk. These hurdles would likely prove transitory, however, as numerous key market fundamentals paint a very different picture.

The global economy is slowing, and even with a deal on trade, both the U.S. and China (the world’s first and second-largest economies) could see a very bumpy road ahead. As the next major recession approaches and takes hold, the U.S. and other nations may lack the tools necessary to effectively and swiftly combat the slowdown. Interest rates are still well-below pre-financial crisis levels, and many central bank balance sheets remain overinflated with previous asset purchases.

In short, global central banks could potentially be forced to resort to even riskier and untested measures to fight the next depression. This could not only lead to lower equity and asset prices but could put a significant dent in currency values. Such a scenario has the potential to be extremely bullish for gold and hard assets, and prices could rise substantially from recent levels.

The next several months will provide some important clues about the state of the global economy. If further weakness is seen in the data stream or if stocks again turn decidedly lower, central banks could be forced into action. Some may argue that such a scenario is not only likely, but inevitable. This idea may keep gold on the offensive in the weeks and months ahead as an increasing amount of “smart money” looks diversify in alternative asset classes and avoid the next major collapse in equities.

The Week Ahead In Gold

February 11, 2019/in Commentary, Market Updates, Market Updates/by Border Gold Corp.

After a brief period of consolidation, the gold market could potentially be headed higher in the weeks ahead. This week; markets will remain focused on U.S. macro data as well as the potential for another U.S. Government shutdown.

There are numerous wildcards that could drive price action in the week ahead. The deadline for a deal on Trump’s proposed wall along the country’s southern border is February 15th. If a deal to fund the wall is not reached, Trump appears ready and more than willing to shut down the government again. This scenario could potentially send gold prices higher as it did in late December when the government was closed for business.

Any shutdown-based rally may prove transitory in nature, however, as shutdowns have historically not had much of a long-term impact on gold prices.

Markets will also keep an eye on any commentary from the Fed. `Although there is no FOMC meeting this week, there are several Fed officials speaking at various engagements. After making a large swing from the hawkish to the dovish side of the ledger in recent weeks, the Fed is now faced with an interesting dilemma: How to balance a strong labor market and resilient U.S. economy against the backdrop of weakening global growth. The Fed is also likely to take the stock sell-off that marked a weak end to 2018 into account and may look to rock the boat as little as possible. Dovish expectations have possibly been overblown at this point, however, and at least one rate hike from the central bank this year cannot be ruled out.

The ongoing U.S./China trade negotiations appear to have hit a snag, and the deadline for a deal by March 1st is quickly approaching. A U.S. delegation will be in Beijing to continue previous talks, but as of right now it does not appear that President Trump and Chinese Leader Xi Jinping will be meeting any time soon. If significant progress is not seen in the weeks ahead, the agreed upon deadline will likely come and go without so much as the initial framework for a deal in place. The trade war has made a clear dent in the economies of both countries, and the longer it continues the deeper the global slowdown may become.

The pieces for a long-term sustainable rally in gold appear to be in place. The market seems to now find itself in a win/win situation regardless of what the Fed does or doesn’t do and stands to see further upside as global economic and geopolitical risks rise. The market’s intermediate-term uptrend remains intact, and buyers have thus far been willing to step in and scoop up the yellow metal on any dips. The market has also benefited from some recent weakness in the U.S. dollar, but will likely need a further breakdown in the greenback to really start making significant upside headway.

An increasingly dovish-Fed and the potential for rate cuts this year or next could set the stage for a major dollar decline. Such a decline would also likely coincide with a rising risk of recession, increasing risk aversion and lower equity markets. Put together, these factors form what could be the ideal recipe for significantly higher gold prices in the months and years ahead.

The Week Ahead In Gold

February 4, 2019/in Commentary, Market Updates, Market Updates/by Border Gold Corp.

The last couple weeks have demonstrated just how quickly things can turn in modern financial markets. Without question, last week’s FOMC meeting will remain a primary market-driver and subject of debate in the months and years ahead.

Has the Fed Lost All Credibility?

This is the question that investors may now be asking. Last week’s Fed meeting took even the most-dovish expectations and turned them upside down. The Fed’s actions-or lack thereof-could set the stage for significant dollar declines and higher asset prices. Put another way, the central bank is not willing to pop a bubble of its own making.

Not long ago, the Fed seemed willing to take the heat that stemmed from criticism of its ongoing policy “normalization.” Just a few months back, Fed Chief Jerome Powell had suggested that rates had a way to go before entering neutral territory. That opinion changed soon thereafter, when Powell said that rates may be closer to neutral than previously thought. The Fed then went ahead with previous plans to hike the Fed Funds rate by another 25 basis points in December.

The markets did not take the rate hike lightly, and the month of December saw a significant rise in volatility as equity markets suffered steep declines. Although numerous issues such as the ongoing trade war with China and arguably overstretched valuations likely played a role in the stock market pullback, most analysts seem to agree that a hawkish Fed was the primary culprit behind the sell-off.

The last few months have seen a steady stream of Fed criticism, with everyone from Mad Money hostJim Cramer to President Trump voicing their displeasure with the Fed’s course of action. The Fed has tried to maintain its independence, however, and as recently as several weeks ago reiterated its plans for further hikes this year.

Those plans now seem to have been thrown right out the window. In an abrupt about-face, the Fed has not only reversed its position on further rate hikes but has also said it will halt its ongoing balance sheet reduction.

In effect, the Fed has announced that it will keep “priming the pump.” Whether this decision came about as a result of increasing political pressure or significant changes in the central bank’s outlook, the central bank’s reputation is likely to take a major hit.

For investors, however, this makes one key issue crystal clear: The markets simply cannot do without ongoing Fed stimulus.

Not only has the Fed now halted all of its quantitative tightening measures, it has suggested that it may need to start easing again. The problem is, with the current Fed Funds rate at 2.25%-2.50% and the central bank still holding nearly $4 trillion in securities on its balance sheet, the Fed will have little ammunition to fight the next recession.

The smart money seems to recognize this. Recent inflows and bullish price action in the gold market may suggest that many investors see the writing on the wall and are looking to position accordingly. Although stocks may get an initial bump from these developments, the bubble will burst at some point. When it does, look out below. If price action related to previous Fed balance sheet expansion and contraction are a good indication, stocks could eventually decline by 50% or more.

The Fed’s actions are likely to make the next recession longer and deeper than the previous. The central bank’s inability to continue tightening is also likely to cause significant dollar weakness in the process. Any way you slice it, the current environment is highly bullish for gold and recent gains in the yellow metal could simply be the tip of the iceberg.

The Week Ahead In Gold

January 21, 2019/in Commentary, Market Updates, Market Updates/by Border Gold Corp.

The gold market lost ground in light trade Monday as markets were closed in observation of the Martin Luther King Holiday. Driving price action across markets was the latest economic news out of China.

On Monday, China reported the slowest pace of economic growth since 1990. The world’s second-largest economy reported a growth rate of 6.6% for 2018. The fourth quarter was especially trying for the country as growth slowed to a pace of 6.4% from Q4 last year.

The ongoing U.S./China trade war is certainly having a clear effect on China’s economy. Chinese exporters were forced to lay off employees and the damage control doesn’t end there. Companies also reported slashing capital expenditures, cutting prices and even cutting wages. The squeeze on corporate profits and employment could potentially cause the slowdown to deepen further and some analysts are of the opinion that economic conditions may be far worse than the data suggests.

Further evidence of a drastic slowdown in China could impact markets this week and beyond. Stock and commodity prices could both come under pressure as Chinese demand weakens further and as risk appetite fades.

Outside of China, the U.S. is dealing with plenty of issues of its own that could drive market volatility. The U.S. economy has also shown signs of slowing, and the manufacturing sector has become a particular source of concern. A downtrend has been established in manufacturing across various regions as the effects of the trade war become increasingly apparent. To make matters worse, the Federal Reserve has thus far stuck to its planned rate hikes and balance sheet contraction.

The Fed has recently begun to sing a different tune, however, as the slowdown gathers steam. Although the Fed still has two more rate hikes penciled in for 2019, traders are betting that no hikes will take place. In fact, some are even wagering that the central bank could be forced to cut rates before the end of the year.

Recognizing the recent string of weakness, the Fed will follow the data before making any further decisions. If the Fed elects to keep rates at current levels, or to begin cutting again, the effects on the dollar could be substantial. Dollar strength in recent months has been a primary obstacle to higher gold prices and any significant weakness in the greenback could pave the way for the next major leg up in gold.

As a major consumer of gold, Chinese weakness has the potential to weigh on the metal. That weight may be counterbalanced, however, by a weaker dollar and rising risk aversion. The gold market may also begin to see fresh inflows if equity markets resume their recent downtrend. Although stocks have posted some solid gains in recent sessions, the market is now at a large resistance area that could potentially act as a key turning point.

After making one significant attempt to crack key upside resistance, the gold market has pulled back. Although buyers have been quick to jump in and buy dips in recent weeks, the metal’s failure to make a fresh high may make the market increasingly vulnerable to a larger sell-off.

The Week Ahead In Gold

January 14, 2019/in Commentary, Market Updates, Market Updates/by Border Gold Corp.

The gold market will likely pick up where it left off this week. The yellow metal has been lingering near the key $1,300 level and has thus far made one serious attempt at a breakthrough.

The market has several key factors currently working in its favor, one of which is a recent shift in thinking at the Fed. Several Fed officials spoke last week (each with a seemingly different opinion) and the minutes from the latest Fed policy meeting were released. Of note is the fact that some members felt a December rate hike was not necessary and that the central bank should hold off on further tightening.

Although the Fed followed-through with its plans for a final hike in 2018, the central bank has adopted an increasingly dovish tone in recent weeks. The central bank currently has two further hikes penciled in for 2019, though that could change. Traders are currently betting on zero rate hikes this year, with some even suggesting that the Fed could end up cutting rates again this year.

Inflation data released on Friday showed consumer prices declining by .1% on a month-over-month basis and rising by 1.9% on an annual basis. These figures may work in gold’s favor. Tame inflationary pressures may allow central banks in the U.S. and elsewhere more wiggle room in terms of policy tightening and could lead to a considerably-less hawkish outlook.

The Fed will now almost certainly take no action until the second quarter at the earliest. The central bank will take a wait-and-see approach over the next several weeks. Given the recent string of poor manufacturing data in the U.S. and worrisome figures coming out of China, the potential for further equity market declines and volatility exists. Any further downside in stock markets or sharp increases in volatility could give the Fed further reason to remain on hold.

The gold market will also be watching the dollar this week. The greenback recently touched a three-month low and could remain under pressure. Investors will likely pay close attention to the Fed, looking for any clues as to the timing and extent of any further tightening. If the central bank decides to adjust its current outlook from two hikes to one, or even none, the dollar could see significant selling pressure.

Of course, these issues will need to be dealt with as the U.S./China trade war continues and as the U.S. Government remains shutdown. Although there has been some recent optimism over trade negotiations, there has thus far been nothing concrete that investors can “take to the bank.”

The ongoing government shutdown will become increasingly problematic for the U.S. With the newly-democratic House of Representatives willing to stand their ground while President Trump has insisted that he will not budge on his position, the potential for geopolitical fireworks may be on the rise.

Given the number of unknowns and the various risks currently being faced by global markets, equities and risk assets may continue to see decreasing inflows. As this asset rotation continues to gain steam, gold may finally have the horsepower to punch through key resistance and embark on a fresh leg higher.