Gold has posted sharp losses in the Monday session. In North American trading, the spot price for an ounce of gold is $1282.39, up 0.43% on the day. On the release front, Existing Home Sales improved to 5.48 million, beating the forecast of 5.42 million. Later in the day, Fed Chair Janet Yellen will speak at an event in New York City. Wednesday will be busy, as the US releases employment, durable goods and consumer confidence reports. Also, the Federal Reserve releases the minutes of its November policy meeting.
US housing indicators continue to beat expectations. On Monday, it was the turn of Existing Home Sales, which climbed to a 4-month high. On Friday, Building Permits and Housing Starts impressed the markets. Building Permits for single-family homes jumped to 1.30 million, above the estimate of 1.25 million. The annualized pace of 839,000 building permits in October was the fastest since September 2007. Housing Starts also sparkled, accelerating to 1.29 million, compared to an estimate of 1.19 million. The catalyst for the strong numbers were hurricanes Harvey and Irma, which caused massive damage in the southern part of the US. With rebuilding efforts well underway, construction numbers should remain strong in the fourth quarter.
As President Trump’s tax reform bill winds it way through Congress, gold prices have been fluctuating. On Monday, gold prices jumped 1.4%, erasing the losses seen on Friday. President Trump won a major legislative victory on Thursday, as the House of Representatives passed its version of the tax bill, by a vote of 227-205. However, with the vote largely based on party lines, Republicans will have a tougher battle passing the Senate version of the bill, as the Republicans have a slim majority of 52-48. The tax legislation provides major tax relief and cut corporate taxes from 35% to 20%, and if Congress does enact a new tax code, the US dollar could make strong gains, at the expense of gold.
