The potential for real tax cuts in the United States for both corporations and individuals, along with the fact that today North Korea fired a ballistic missile towards Japan in their latest act of aggression, had little effect on current gold pricing.
According to multiple news sources, North Korea fired an intercontinental ballistic missile today. Apparently, this missile flew higher than any of their previous tests and flew for over 50 minutes.
According to the Pentagon, they believe that the test involved an intercontinental ballistic missile that traveled approximately one thousand kilometers before it crashed into the Sea of Japan.
According to the White House Press Secretary Sarah Huckabee Sanders, the president was briefed on this event while the missile was “still in the air.” She also stated the Japanese Prime Minister Shinzo Abe convened a meeting of cabinet officials. Also revealed was the quick response from the South Korean military which involved firing a test missile of its own.
This certainly ratchets up the recent calmer waters in the Korean Peninsula.
Added to this is the fact that the Republicans are attempting to initiate a major tax overhaul by the end of the year. Recently the Senate Budget Committee voted to send a tax bill to the Senate floor. According to Bloomberg Politics, voting on this bill could begin as early as Thursday. Last month the House passed its own tax cut measures, and it is now up to the Republican Senate to complete the task.
Although these significant events could have a dramatic impact on the price of gold, nothing could be further from the truth. As of 415 PM Eastern standard time, gold futures are currently trading in a tepid range, trading down $0.60 on the day to be presently fixed at $1293.80.
Spot gold has less of a net change on the day and is fixed at $1293.90, which is a net change of -$0.10 on the day. On closer inspection this -$0.10 is a combination of $4.40 of gains attributable to buyers bidding up the precious yellow metal, and -$4.50 due to dollar strength, according to the Kitco Gold Index (KGX).
Although there is a tepid and almost muted response to current events, don’t count either out yet. The reality is that either of these two events could dramatically influence a major change in gold pricing. An escalation regarding the North Korean conflict would of course spike gold higher, whereas the passing of a real and concrete tax cut would be incredibly supportive of the U.S. dollar thereby putting gold under pressure.
Reference: Kitco
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