Gold prices have dropped in the Thursday session. In North American trade, the spot price for one ounce of gold is $1229.10, down 0.39% on the day. In the U.S, durable goods reports were mixed, and unemployment claims moved higher. On Friday, the U.S releases two key indicators – Advance GDP and UoM Consumer Sentiment.
U.S durable goods reports for September were mixed. Core durable goods orders came in at 0.1% for a second straight month, missing the estimate of 0.5%. Durable goods orders dropped from 4.5% to 0.8%, but this was much better than the forecast of -1.3%. Unemployment claims rose to 215 thousand, a shade above the forecast of 214 thousand. Despite these tepid numbers, the U.S dollar is broadly higher on Thursday, and the struggling pound has fallen to its lowest level since the first week of September.
Gold often acts as a safe-haven, but it’s the U.S dollar that continues to be a magnet for nervous investors, due to increasing geopolitical tensions. These include the U.S-China trade war, the uproar over the killing of a Saudi journalist in Turkey and tense relations between Moscow and Washington. There are headaches in Europe as well, with concerns over the Italian budget and the Brexit negotiations.
The Federal Reserve is widely expected to raise rates in December, which would mark the fourth rate hike this year. What can we expect in 2019? Many economists expect three rate hikes next year, and this was reinforced by Dallas Federal Reserve Bank President Robert Kaplan on Wednesday. Kaplan said he expects rates to rise into a range of 2.5% to 2.75%, or more likely, into a range of 2.75% to 3.00%. Kaplan noted that his estimate of a “neutral rate’ is slightly below 3% – anything above this level would move rates into a “restrictive’ stance, which could hamper economic growth and push inflation lower. The stock markets received a jolt this week as Chinese growth slipped to a 10-year low in the third quarter, and further weak numbers out of China could affect the U.S economy and cause the Fed to scale back its rate hike plans for 2019.
