Gold prices rose against a falling US Dollar on Wednesday morning, touching 2-week highs at $1266 per ounce despite an overnight jump in longer-term US interest rates after lawmakers in Washington voted to approve President Trump’s tax plan.
Adjusted for market-based inflation forecasts, 10-year US interest rates typically move opposite to the direction of gold priced in Dollars.
On a weekly basis, however, this negative correlation between gold and real 10-year Treasury yields has been weakest over 2017 since the 12 months ending July 2015, reading -0.43 against an average over the last decade of -0.74.
Due for a re-vote today owing to a procedural snag, Trump’s tax cuts will add $1.4 trillion to the annual federal deficit over the next decade according to the bi-partisan Congressional Budget Office.
This post was published at FinancialSense on 12/20/2017.