Gold declines as American Senate passes tax bill

Gold declines as American Senate passes tax bill

On Monday, gold slumped in the beginning of a busy week because market participants shifted from safe-haven assets after the US Senate managed to approve a tax overhaul.

In New York, gold futures hit $1,276.50 per troy ounce, sliding 0.5%, from Friday's close.

Negotiations on reconciling the Senate version and with a separate version already approved by the House of Representatives were expected to burst out a bit later in the week. Therefore, a final bill can be sent to Donald Trump to have it signed. By Christmas republicans hope to reach a compromise.  

As the Trump administration stressed, its tax cuts will stimulate surge and drive inflation, potentially ensuring a faster pace of monetary tightening by the Fed.

Gold is extremely sensitive to lifting interest rates.

On December 12-13 the Fed is expected to hold its final policy gathering of 2017, with interest rate futures pricing in a 100% likelihood of a rate lift at that gathering. At least it’s ascertained by's Fed Rate Monitor Tool.

However, financial markets turned to be doubtful as for the Fed’s capability of raising rates as much as it would like in 2018 due to worries over the sluggish inflation outlook.



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