VIDEO - Bart Melek: Gold Volatility, Trump’s Tariffs and Outlook for Commodities

Bart Melek, director and global head of commodity strategy at TD Securities (NYSE:TD), chatted with the Investing News Network at the 2018 Prospectors & Developers Association of Canada conference.

He said one of the biggest drivers behind the recent volatility in the gold price has been “the realization … that the Federal Reserve may be a little bit more hawkish than I think many have expected.”

Melek explained that the economy is doing better than many people had thought, partly due to “very favorable tax treatment of corporations in the US.” He acknowledged that Trump’s tax overhaul and a decent level of consumer spending have contributed to a sense of optimism.

He added, “tax cuts on the corporate side will drive investment and will probably on the margin help economic growth, as employment remains strong and there is beginning to be some concern about inflationary pressures.” Melek predicts that there will be three to four interest rate hikes in 2018, and possibly one to two in 2019. But the tightening cycle is near its end, and “that’s what makes us somewhat optimistic about the future for gold.”

In the short term, Melek said gold will be range bound, but “we see better times ahead in the latter part of the year as the US dollar weakens.”

Melek also shared his insight on the silver, platinum and palladium markets. He added that TD Securities is “fairly optimistic that 2018 will be a decent year for industrial metals and base metals because we are approaching the late cycle of economic growth.

Melek also weighed in on US President Donald Trump’s recent promise to implement tariffs of 25 percent on steel imports and 10 percent on aluminum imports. He discussed the impact those tariffs could have and the potential for “trade retaliation” from allies and partner countries.

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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.