Written by Border Gold     December 05, 2017

The gold market will have plenty to consider as the new trading week gets under way. The U.S. Senate has passed its version of a tax overhaul, paving the way for republicans to implement significant corporate tax cuts and other changes. Now, the Senate and the House of Representatives will have to iron out any differences between their plans before the new code can become law. Despite this, the Senate vote is another major step in the right direction for the Trump administration as it tries to make good on a key campaign promise.

Speaking of the Trump administration, on Friday General Michael Flynn, a former Trump campaign adviser, pleaded guilty to lying to the FBI. The latest indictment by special counsel Robert Mueller and his team could potentially have a significant impact on the course of the investigation going forward. It is widely thought that Flynn may have damaging testimony on other key players in the campaign, including other members of Trump’s inner circle.

News of the guilty plea sent gold moving sharply higher, and fueled some selling pressure in stocks. That initial knee-jerk reaction could fade as the new trading week gets under way. On the other hand, any new indications of potentially damaging evidence against the campaign could fuel further selling in stocks and risk assets while giving a boost to gold and other perceived safe haven assets.

Outside of the geopolitical sphere, stocks and the dollar could dictate price action in the gold market this week. The dollar index has been trending lower, and could potentially be on the verge of a major downside breakout. The dollar will likely be driven by further developments regarding the tax overhaul, and if a deal seems likely the dollar may regain some lost ground. On the other hand, if a tax deal begins to hit some significant snags, it could add further selling pressure to the greenback, adding to an already weak technical backdrop. A break below the lows seen in September could trigger a more aggressive move lower in the currency, and could act as an important catalyst for any upside breakout in gold.

Stocks have thus far remained very resilient, and may continue their winning ways in the absence of any fresh, bearish news. Tax overhaul deliberations could play a major role in stock market in the weeks ahead as well. Anticipation of a deal could keep the bull market going, while some analysts believe that lack of a deal being reached could potentially act as the last straw for the equities market.

The gold market remains stuck in its recent trading range, but as more bullish geopolitical and economic factors add up, the market could be gearing up for a significant move higher. The market is trading near key levels once again, and if buyers absorb any downside attempts at current levels it could be indicative of underlying market strength.

The next few weeks going into the end of the year could see muted price action across asset classes in the absence of any fresh, major news. News has not been difficult to come by, however, and with each trading day comes the possibility of a major market shakeup given the current geopolitical climate along with ongoing domestic issues being seen in the U.S.