Gold has posted considerable losses in the Thursday session. In North American trade, the spot price for an ounce of gold is $1317.95, down 0.54% on the day. On the release front, unemployment claims dropped to 226 thousand, just below the estimate of 226 thousand. Manufacturing reports were mixed. The Philly Fed Manufacturing Index dropped to 22.3, missing the forecast of 23.1 points. There was better news from the Empire State Manufacturing Index, which jumped to 22.5, crushing the estimate of 14.9 points. On Friday, the US releases two key construction reports and Preliminary UoM Consumer Sentiment.
After an uneventful week, gold prices have dropped on Thursday, after a strong unemployment claims release. Still, there are expectations that gold could quickly recover, as the markets nervously follow the aftermath of a toxic attack in London in early March. Relations between the UK and Russia have nosedived after a toxic attack in London aimed against a former Russian intelligence officer was poisoned, and the UK has laid the blame on the Kremlin. The May government has ordered the expulsion of 23 Russian diplomats, and Russia is sure to retaliate. As well, President Trump has slapped tariffs on steel, and this could trigger a response from the EU and China. These hotspots have dampened risk appetite on the part of investors, and if these crises continue, safe-haven gold could be a big winner.
The Federal Reserve is widely expected to raise interest rates next week. According to the CME Group, the odds of a quarter-point raise stand at 89 percent. What can we expect from the Fed during the year? The pressing question is how many rate hikes will we see in 2018. The current Fed projection remains at three hikes, but the superb nonfarm payrolls report last week has raised speculation that the Fed could accelerate the pace to four hikes, which would be good news for the US dollar. Investors will be keeping a close eye on key US data, especially inflation indicators. If these numbers improve, we’re likely to see four rate hikes in 2018.
