Gold has posted gains in the Tuesday session, erasing the losses seen on Monday. In the North American session, the spot price for one ounce of gold is $1303.85, up 0.44% on the day. On the release front, CB Consumer Confidence dipped to 128.0, missing the estimate of 128.0 points. On Wednesday, there are two key events – ADP nonfarm payrolls and Preliminary GDP.
The markets are focused on geopolitical events this week. The political turmoil in Italy has unnerved investors and boosted gold prices, but the upward movement has been limited, as the much-anticipated summit between the U.S and North Korean leaders may take place. President Trump and North Korean leader Kim Jong-un are scheduled to meet in Singapore on June 12, but curiously, neither side will confirm whether the meeting is on. Last week, Trump sent a letter to Kim, saying that Trump was canceling the much-anticipated meeting. However, the White House has since sent a team to Singapore and a senior North Korean official is on his way to Washington to meet with Secretary of State Mike Pompeo. If there is confirmation that the meeting is on, traders can expect risk appetite to jump and gold prices to fall.
The drama in Italy is dominating the headlines this week. The political crisis started on the weekend, when President Sergio Mattarella vetoed a ministerial pick of the two parties which were expected to form a coalition, the League Nord and the Five Star Movement. Mattarella rejected the suggestion of Paolo Savona as economic minister, given that Savona is a firm critic of the euro and supports Italy exiting from the eurozone. The reaction from the two parties was fast and furious, with claims that Mattarella was a puppet of Germany and the EU, and there were even demands for his impeachment. The prime minister-elect, Giuseppe Conte, has given up his mandate to form a government, and Mattarella has invited Carlo Cottarelli, a former IMF economist, to form a temporary technocrat government. This could mean that Italy will hold another election in the fall, unless there are more political twists and turns in this crisis.
