NEW YORK (Scrap Register): Gold prices continue to hold above $1,200 an ounce ahead of Friday’s big political event, with February COMEX gold futures settled slightly down by 0.10% at $1,212.10 an ounce. 
According to George Gero, RBC Wealth Management’s managing director, gold prices remain resilient Wednesday and asset allocators seem to be discovering gold again. Gold holding well in spite of more Fed speakers yesterday and later Chair [Janet] Yellen.
Another big up for open interest in gold futures (474,077); this could be highest for the year; prices are up 6% this year and we started with 404,029 [contracts] on 12/28/16.” 
To Gero, this suggests fund managers are slowly coming back to the gold market, although he doesn’t expect it for too long. “Some minor profit taking and option expiration after the inauguration...could ensue as option in the money become futures contracts subject to margin,” Gero added. 
Nomura economists, in line with the consensus view, said that they do not expect any changes to the European Central Bank’s monetary policy program at Thursday’s meeting. 
“Instead, we expect the focus to be on the Governing Council’s assessment of macroeconomic developments in light of some positive data flow over the past few weeks,” Nomura added.
“Thanks in part to that data flow, we now believe the risks to the ECB’s -- and consensus -- forecasts for the growth and inflation outlook have shifted to the upside. During the post-meeting press conference, President (Mario) Draghi will nevertheless probably re-emphasise the ECB’s strong commitment to the existing monetary policy program by stressing some of the numerous downside risks that could generate further instability for the region in the months ahead,” Nomura added.
Brown Brothers Harriman analysts said that their bullish outlook on the U.S. dollar is driven by macroeconomic considerations. On Tuesday, comments by President-elect Donald Trump – expressing concern about dollar strength – led to weakness in the U.S. currency. 
“Of all the things that can and do move foreign-exchange prices, the personal preference and wishes of officials are often not particularly salient except for risk,” BBH said. “Ultimately, our bullish outlook on the dollar is driven by macroeconomic considerations, including the divergence of monetary policy.”
BBH analysts added that comments by San Francisco Fed President Williams and Fed Governor Lael Brainard basically “reiterated that fiscal stimulus could lift growth and boost the deficit, and that monetary policy would have to take that into account.”