Donald Trump’s disappointment with the Obamacare health system and the European Central Bank meeting were the highlights of the week. How did they affect gold prices? Learn all the details from our report.
At the beginning of the week, the price of gold kept rising. The gold market was affected by the statement of Robert Kaplan, CEO of the Federal Reserve Bank of Dallas, on trimming the balance sheet: "I think that we should initiate this process very soon, possibly in September this year."
On Tuesday 18th, gold prices jumped to the July’s maximum of $1,241 due to the fall of the US currency. The financial market of the United States was affected by the viability of Obamacare, which President Trump was so eager to cancel. Due to the lack of votes concerning this cancellation, other Trump’s promises made during the election campaign were hampered too. As a result, the dollar dropped while gold rallied.
Donald Trump: “As I have always said, let ObamaCare fail and then come together and do a great healthcare plan. Stay tuned!”
On Wednesday 19th, the price of the precious metal fell after the reached maximum but regained its position fast. According to Kitco specialists, gold is "taking a breather" against the background of the dollar’s rise; at the end of the day, a gold ounce was worth $1,241.
The fluctuations were supported by the unstable situation with Obamacare and reports about the US Senate supporting its abolition in the near future. US Senator Mitch McConnell said that the elimination of Obamacare will ensure the transition to a new health program:
"In a matter of days, the Senate will vote to abolish Obamacare with a two-year grace period to ensure a stable transition to a patient-oriented healthcare system that will give Americans access to quality and affordable health services."
On Thursday 20th, the decision of the Bank of Japan to keep the interest rate at a negative level of -0.1% rallied gold to $1,243. The bank strives to achieve a stable inflation rate of 2%.
In addition, on Thursday, ECB President Mario Draghi made a speech which revealed no intentions to hike the interest rates. This decision helped the euro rise against the dollar. Bank of America analyst, David Wu, denied further strengthening of the US currency:
"There is every reason to believe that in the next few months the US currency will weaken against European and Japanese currencies. All this is due to the lack of specificity concerning the tax reform in the United States. Until the situation clears up, do not expect the dollar to grow. By the end of September, the US currency buyers should remain out of the game."
On Friday 21st, the weakening of the US dollar gave an impetus to the rise in gold prices. Mario Draghi's speeches always resonates in the market. This time his announcement about changes in monetary policy to take place this autumn contributed to the growth of gold prices up till $1,254:
"By that time, we must receive all the comprehensive information... If we see unexpectedly improved economic conditions or the need for stricter policies, then we will act."
On Monday 24th, gold was priced at $1,252 per ounce. Precious metal were under the influence of the message about the unplanned speech of the US President on the health program. Donald Trump’s announcements never fail to affect the financial market. The US currency keeps weakening due to political problems and investigations of Trump's connections with Russia.
Experts at Danske Bank believe that the reason for the dollar’s retreat is the inability to solve the problem with the health care reform in the United States: "We may expect the growth of EUR / USD to $1.20 but only if there is a further imbalance in the monetary policy of the Central Bank of Europe and the US."
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