Gold continues to trade sideways this week. Despite two significant announcements yesterday, gold prices did not move much. The Republican tax plan largely met the market's expectations. The GOP is looking to cut corporate taxes by 20%, lower taxes for the poor and middle class while maintaining existing tax rates on high income earners. A broader overview of the tax plan is available in today's US dollar update. The appointment of Jerome Powell to the role of Fed Chairman was also a non-market moving event. Given extensive coverage of the issue in the media, markets were largely expected Powell to be named the next Fed Chair.
Over the next few days, gold prices will be heavily influenced by future inflation expectations. As crude oil prices march higher and tax reforms look more likely in the US, our view is that gold is likely to remain under pressure. After its most recent top above $1,300, gold is now below $1,276.