Gold is showing limited movement at the start of the week. In North American trade, spot gold is trading at $1268.50, down 0.08% on the day. On the release front, Pending Home Sales posted a gain of 1.6% in June, beating the forecast of 0.9%. On Tuesday, the US publishes Personal Spending and the ISM Manufacturing PMI.
US Advance GDP impressed in the second quarter with a strong gain of 2.6%, beating the estimate of 2.5%. The economy was boosted by strong consumer spending and business investment, as fears of a second straight quarter of weak growth proved unfounded. Still, inflation remains weak, and wage growth fell in Q2 despite a robust labor market and unemployment at just 4.4%. Investors are skeptical that the Fed will press the rate trigger in December due to low inflation. The odds of a December increase are at 42%, compared to 50% a month ago, according to the CME Group.
The US dollar has posted broad losses in response to climbing political risk in the US, and investors have snapped up gold, a traditional safe haven asset, in response. Gold has reeled off three consecutive weekly gains. There was more angst for the White House on Friday, as President Trump’s struggling healthcare bill gasped its final breath as the bill was defeated in the Senate after three Republican lawmakers joined the Democrats and voted against the bill. This is another setback for President Trump, who has been unable to get Congress to pass any significant legislation, despite the Republicans controlling both the House and the Senate. Trump will now be able to focus on other issues such as tax reform, but investors are skeptical as to whether the President will have the support he needs in Congress to pass major legislation.
