US president-elect Donald Trump held his first press conference last night. He acknowledged that Moscow had hacked the election and made it clear that he would isolate himself from his own business to avoid potential conflict of interests, although still maintain ownership. 

But it is what he didn’t mention – fiscal stimulus - that worries market participants. The US dollar rally was based on the assumption that Trump’s administration will push through a massive infrastructure building and fiscal stimulus package, which will lead to higher inflation in the future. Rising inflation and treasury yields will then force the Federal Reserve to consider a faster pace of rate hikes to counterbalance that effect.

The slump in the US dollar index last night indicated that assumption is now unwinding because the president- elect never even mentioned that key word “stimulus”, which the market has been widely anticipating.

Uncertainty is rising, along with gold prices. Gold is challenging a key resistance level at $1,193 this morning and there is a reason for it to go higher if this uncertainty continues to rise.

Gold  Cash

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