Losing almost 7/10 of a percent today, the U.S. dollar was instrumental in raising gold prices, even compensating for the modest amount of selling of gold. As of 3:30 PM Eastern standard time, the U.S. dollar index is currently trading down 64 points at 93.745.
Weakness in the U.S. dollar was more than able to compensate for the downticks in gold. Currently, December Comex futures are trading $2.80 higher and are currently fixed at $1281.80.
Spot gold is currently fixed at $1281.40 which is a net gain of $3.50 on the day. However, on closer inspection, we see that regular trading is actually favoring the sell side with the precious yellow metal taking that commodity $5.60 lower on the day.
If not for the weakness in the dollar index gold pricing would undoubtedly have closed negative for the day. According to the Kitco Gold Index, a weakening U.S. dollar is adding approximately $9.10 worth of value per ounce, resulting in the current fixed price of spot gold, up $3.50 and settling at $1281.40.
To Cut or Not to Cut Is Not the Question, Rather It Is How to Cut
As expected, tremendous uncertainty continues to loom overhead in regards to upcoming United States tax reforms. Inasmuch as both sides of the political fence believe a tax cut would be a prudent move at this point, a large divide still exists as to the specifics and details of the post-tax cut. Current legislation presented by the Republican constituents seems to favor a trickle-down approach in which corporations, as well as the country's wealthiest individuals, would reap the most significant benefits.
At the same time, to create any viable tax cut that is deficit neutral seems to be an insurmountable challenge considering what is necessary to achieve such a goal. A major reworking of entitlements or some other savings from the current budget must be implemented to achieve such a goal.
According to Bloomberg politics, “the Senate tax-writing committee continues hammering out the details of its tax cut proposal on Tuesday, while the house may vote on its bill as soon as Thursday…Democrats on the Senate Finance Committee objected to an emerging Republican plan to add the repeal of Obama care laws individual mandate to tax overhaul legislation”.
The article correctly illustrates that “eliminating the requirement for individuals to purchase insurance would generate an estimated 330 billion in savings over ten years -- helping tax writers to meet avoid increasing the federal deficit to deeply with their tax cuts.”
Of course, those savings would be the net result of avoiding payments of subsidies for an estimated 13 million Americans, most likely the Americans that need health care the most and are least able to afford these costs without the subsidies.
It seems quite clear that the completion of a tax cut will require significant concessions on both sides, but even that without some smoke and mirrors along with a good dose of magic will be necessary to complete the task.
Wishing you as always, good trading,