Thursday March 23, 2017 19:57
The House of Representatives postponed a planned vote on the health care legislation, as President Donald Trump did not manage to get enough votes to repeal and replace Obamacare.
The reports of the delay started to flood in late Thursday afternoon, with some media saying that the vote will now take place Friday morning.
The news put pressure on the market, which saw this vote as an important test of President Donald Trump's ability to come through on his campaign promises, including getting rid of Obamacare, introducing tax cuts and infrastructure spending.
“The vote to repeal the Affordable Care Act (or Obamacare) is expected to be a bellwether for the Trump Administration’s ability to implement his agenda,” said Bricklin Dwyer, Senior Economist at BNP Paribas Securities.
Dwyer noted that the market is currently underestimating Republican success with the bill. “We see chance of passage as still pretty decent, though the timing is less certain.”
John Howlett, Division Vice President and Head Trader from Mitsubishi International, also stated that the outcome of the vote will be key for the markets. “U.S. media are flogging this vote as the referendum on Trump’s next four years. Somewhat valid, but a bit hyperbolic to say the least.”
Until the vote, market participants are in a holding pattern, explained executive producer of The Gold Forecast, Gary Wagner.
“It will be a key component as to whether or not the optimism that has fueled US equities to all-time record highs will continue. It will shape market sentiment to reflect the answer to our primary question: can President Trump deliver on his promise to get things done?” Wagner said in his analysis.
On Thursday, gold found strong resistance around $1,250 levels, as the U.S. dollar gained strength and markets focused on the House replacement plan vote.
In electric markets, April Comex gold futures last traded at $1,244.20 an ounce, down 0.40% on the day, after reaching a fresh three-week high of $1,253.30.
Gold’s new highs are now being challenged after a successful six-session rally, triggered by growing concerns that Trump’s reforms will not be that easy to implement. Investors this week were eyeing safe-haven purchases, while opting out of some riskier deals.
“The risk-off trading environment has boosted appetite for safe-haven assets with gold becoming an investor’s popular choice this week. Prices have climbed to a three-week high above $1250 with dollar weakness fueling the upside momentum,” said Lukman Otunuga, FXTM Research Analyst. “From a technical standpoint, the fact that bulls have conquered $1240 on the daily charts suggests that the upside still has some steam. A decisive breakout above $1250 may open a path towards $1260.”
