On Monday, Trump issued his first video message since elections. What can we learn from it?
Two days ago, President-elect Donald Trump bypassed traditional media and released a brief YouTube video. He outlined a list of six promises he could accomplish “on day one to restore our laws and bring back our jobs”. These executive actions are:
- Withdrawal from the Trans-Pacific Partnership.
- Lifting federal restrictions on coal and shale energy production.
- Instructing the Department of Labor to investigate all abuses of visa programs.
- Ordering military leaders to develop a plan to deal with cyber-attacks and other threats to American infrastructure.
- Imposing a five-year ban on executive officials becoming lobbyists.
- Formulating a rule saying that for every new federal regulation, two existing regulations must be eliminated.
Trump’s plan is generally in line with his agenda for the first 100 days, in which he also focused on three issues: cleaning up Washington, protecting American workers, and restoring security and rule of law. However, what is missing is the lack of any mention of the repealing and replacing Obamacare, deporting criminal illegal immigrants, building the wall at the border with Mexico or renegotiation of NAFTA. Therefore, Trump’s plan for the day one may be negative for the gold market, as it does not mention some of his most worrying promises or softened others. Actually, his list of executive actions sounds quite reasonable, with an exception of first and third point, depending on the details. On the other hand, Trump also did not mention anything about his promise to boost infrastructure spending. If markets conclude that increasing government expenditure is not Trump’s priority, gold may catch its breath.
To sum up, Trump released a video with the first message to Americans about his agenda since he won the presidential election. He basically focused on six actions from his plan for the first 100 days. Perhaps more important were the missing promises. President-elect did not mention anything about his most worrying promises (like renegotiating NAFTA or building the wall), neither he said anything about infrastructure spending. This is perhaps why the market reaction was rather muted. Hence, the current ‘Trump rally’ in financial markets may continue for some time, which is bad for the yellow metal.
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Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our trading alerts.
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Arkadiusz Sieron
Sunshine Profits‘ Gold News Monitor and Market Overview Editor
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