President Donald Trump based part of his campaign on helping the average American worker while ensuring that corporations paid their fair share in taxes. The tax proposal that President Trump unveiled today might have some people questioning that point. While investors are keeping an eye on this plan and how it moves through the channels, gold prices have slumped. The mid-week spike we were hoping for doesn’t appear to be on the horizon.
President Trump’s Plan Unveiled
The tax plan that President Trump unveiled is the largest tax cut ever. It is essentially a reform of the U.S. tax code so massive that it has never been attempted. It cuts taxes for small corporations and large corporations. It condenses the current seven tax brackets into three.
To be clear, the White House has said that President Trump “owns” this plan. It is his plan. The concern is that the tax cuts will increase the federal deficit. This is something that President Trump vowed not to do when he was campaigning.
The Gold Market Reacts Negatively
The gold market is reacting negatively to this tax cut. There isn’t any guarantee that it will create enough jobs and boost the economy sufficiently to make up the difference in the deficit likely to occur. As most investors know, the U.S. economy is a primary factor that impacts the price of gold.
It will be interesting to see how the strength of the dollar and U.S. stock markets respond as people review the plan and determine how it is going to impact the economy. Ultimately, individuals might be a bit dismayed by the fact that the plan contains tax cuts for businesses.
The Euro Is Strengthening
The Euro is also strengthening currently, which is decreasing the price of gold. This is going to work with the events in the U.S. to continue to keep the price of gold down unless investors start to get jumpy about the state of the world.
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