Gold and Biggest Near-Term Risk: The Future of Global Trade—RBC Capital Markets
As the price remains subdued, RBC Capital Markets says it is bullish on gold, suggesting that this is an opportune time to build a position. It sees the gold price averaging around $1,265 an ounce in the 4th quarter of 2017.
Technical signals say that this is the time to buy, and reinforce RBC’s bullish outlook on gold. The markets have experienced a whiplash following the recent French election, political instability and security concerns.
But the biggest element of uncertainty in the near future will be global trade. Many have expressed uneasiness over President Trump’s protectionist stance, especially in light of recent statements regarding NAFTA.
The US Senate has approved Trump’s nominee for US Trade Representative, Robert Lighthizer, which cleared the way for renegotiations of NAFTA with Canada and Mexico.
Prior to the vote, two Republican senators, John McCain of Arizona and Ben Sasse of Nebraska, sent a letter to Lighthizer, expressing concern.
“Unfortunately, your confirmation process has failed to reassure us that you understand the North American Free Trade Agreement’s (NAFTA) positive economic benefits to our respective states and the nation as a whole,” McCain and Sasse said.
In another statement, William Dudley, head of the New York Fed, said trade protectionism is a dead end that can hurt the US economy.
“Protectionism can have a siren-like appeal,” said Dudley. “Viewed narrowly, it may be potentially rewarding to particular segments of the economy in the short term. Viewed more broadly, it would almost certainly be destructive to the economy overall in the long term.”