Gold has posted losses on Thursday, erasing the gains which marked Wednesday trade. In North American trade, the spot price for an ounce of gold is $1272.78, down 0.37% on the day. On the release front, unemployment claims climbed to 233 thousand, just below the forecast of 235 thousand. As well, Pending Home Sales rebounded, coming in at 0.0%. The indicator has struggled, recording five declines in the past 6 months.
It’s report card day for the US economy on Friday, with the release of Advance GDP. The markets are forecasting a gain of 2.5%, after Preliminary GDP posted a sharp gain of 3.0%. US economic numbers remain strong, and the labor market is close to capacity. At the same time, inflation has not moved higher, and wage growth has been weaker than expected. Despite the lack of inflation, the odds of a December rate hike have soared in recent weeks, with the odds of a rate raise at 96%, according to CME FedWatch.
The White House has yet to make a decision on the new Federal Reserve chair, but the latest media reports are that John Taylor or Jerome Powell will get the nod, replacing Janet Yellen. The choice of the new chair could have significant ramifications for interest rate policy as well as the US dollar. Powell is expected to follow Yellen’s stance of incremental rate increases, while Taylor is a proponent of much higher rate levels, which could propel the dollar upwards. President Trump is expected to make his choice before embarking on a tour of Asia on November 3, so traders should be prepared for an announcement next week.
