Gold has started the week with slight gains. In Monday’s North American trade, the spot price for an ounce of gold is $1278.37, up 0.23% on the day. On the release front, the only event is the Federal Budget Balance, with a deficit of $58.2 billion expected. On Tuesday, the US publishes Core CPI and CPI.
US consumer confidence levels remain high, but a key indicator lost ground in October. UoM Consumer Sentiment was unexpectedly soft on Friday, coming in at 97.8, missing the forecast of 100.8 points. Last week’s unemployment claims were a disappointment at 239 thousand, climbing to a 4-week high. Investor sentiment will not fall after one soft employment report, but there are some concerns with the US labor market. Nonfarm payrolls rebounded in October with a gain of 261 thousand, after a rare decline a month earlier. Still, this reading was well off the forecast of 312 thousand. Wage growth remains a problem, reflective of chronically low inflation. In October, Average Hourly Earnings posted a flat 0.0%, the first time wages have not increased since November 2016.
Investors are keeping close eye on developments with President Trump’s tax proposal. There are some differences in the House and Senate bills, with some Republicans opposed to eliminating federal deductions of state and local taxes. The Republicans hope to present Trump with a new tax code by the end of the year, but with Democrats putting up fierce resistance, it’s unclear whether the bill will have enough votes to get through Congress. If the proposal is successful, the resulting economic growth could lead to higher interest rates, which would hurt gold prices.
