Weak Greenback and Retail Sales; Divisions Abroad

The United States Federal Reserve held its resolve to raise interest rates with a minimum 0.25% increase at its June meeting, even while noting that inflationary pressures have eased. U.S. retail spending actually decreased 0.3% over the past month when it was expected to hold steady, and the consumer price index remained below the 2% Fed target. The Federal Open Market Committee (FOMC) justified the hike by saying economic activity and the labor market have continued to strengthen.

“Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year,” said the central bank in a statement. “The Committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated.”

Some analysts see the prospects of economic recovery under the non-stop political turmoil in the White House as “less than inspiring” and doubt the Fed’s ability to stick with its prediction of a third interest rate increase in 2017. Goldman Sachs has already pushed back its forecast of such an occurrence to December from September.

 (Shaky) Hands Across the Water

Globally, the U.S. president’s forays into Europe have sown division with traditional allies (Germany and France) and the pro-Brexit government of Theresa May in the UK was shaken to its core in a general election that was intended to give it strength. Growing revelations about Russia’s interference in foreign affairs are stirring fears about the future world order.

The Take-Away

Gold this week touched a price of over $1,280 per ounce. Few consultants see it failing to hit $1,300 and some project it nearer to $1,400, as the promises of the Trump administration to revitalize the economy remain embroiled in political intrigue.

It may be difficult to separate actual occurrences such as these from the “what-if?” abstract. What is known is that political and financial uncertainty tends to push gold prices higher.

It is important that you, dear reader, inform yourself and act to protect your interests.