Kaloti Precious Metals-Morning Market Report- Friday, May 26, 2017

Market Daily & Weekly

Note: Indications only, open and closing prices are bids; Data source: Bloomberg; Times as per Dubai

Fundamentals and News

Gold Open Interest Rises to Highest in a Month Amid Trump Doubts

Gold open interest, a tally of outstanding contracts, rises for a third day to the highest sinceApril 27 amid political uncertainties and concerns about President Donald Trump’s ability to push his budget bill through Congress.

Gold futures for Aug. delivery +0.3% to settle at $1,259.80/oz at 1:43pm on Comex in N.Y., first gain in three sessions

“Recent surge in open interest came from bargain hunters and asset allocators worried aboutGreece, Venezuela, North Korea and geopolitics but mainly about U.S. politics, budgets,” George Gero, a N.Y.-based managing director at RBC Wealth Management, said in a note.

The most common reaction to the austere budgetreleased by the Trump administration on May 23 is that it can’t possibly get past Congress. President Donald Trump himself may be fine with that. In its current form, his budget looks more like a sop to the far-right wing of the Republican Party—cheap currency to buy the goodwill of a crucial part of his base.

Trump has already scored a meaningful political victory—meaningful to him, at least—by eliciting the right responses from the right people. Americans for Limited Government praised the plan as “sober,” while former Treasury Secretary Larry Summers, a Democrat, called it “simply ludicrous”.

Budget Director Mick Mulvaney, a founding member of the House’s conservative Freedom Caucus, brags the plan would wipe out the entire budget deficit and produce a small surplus by 2027, even while spending more on the military and border control and protecting Medicare and the retirement portion of Social Security. That requires leaps of faith both economic and political.

Economically, the proposal assumes 3 percent average annual growth beginning in 2020—way above the 1.8 percent average predicted by the nonpartisan Congressional Budget Office— partly fueled by tax cuts. Until now, the administration had been saying extra growth would simply offset revenue losses from lower tax rates. Now it’s claiming the tax plan itself will be revenue-neutral and the growth it stimulates will produce more tax revenue to close deficits.

Data Forthcoming Releases

Courtesy: http://kalotipm.com.sg/kaloti-market-report-26th-may-2017