Gold continues to lose ground this week. In Tuesday’s North American session, the spot price for an ounce of gold is $1264.55, down 0.90% on the day. In the US, In the US, ISM Non-Manufacturing PMI slowed to 57.4, missing the estimate of 59.2 points. On Wednesday, the US releases ADP Nonfarm Employment Change, with several key employment indicators to follow on Friday.
If Republican lawmakers have their way, President Trump will sign a tax relief bill in a few short weeks. The US Senate passed a tax reform bill on the weekend, but the vote was a squeaker, 51-49, as the vote went along party lines, with one Republican voting against the bill. Now that that the House and the Senate have passed tax bills, a conference committee will try and hammer out a uniform bill which can be sent to President Trump and signed into law. There are some differences in the two bills, notably individual tax rates, the alternative minimum tax, mortgage interest deductions and the estate tax. The Senate and House will have to work out their differences quickly, as the new “merged” bill will have to pass through in both houses. If the bill does become law, it will mark the first major tax reform in the US in 30 years, and could boost the US dollar and weigh on gold prices.
The markets are widely expecting the Federal Reserve to continue to raise rates in the near future, and this sentiment continues to weigh on gold prices. The CME has priced in a rate hike for both December and January at 85%, a slight drop from last week, but still at very high levels. If the US economy continues to perform at its impressive pace into 2018, we could see the Fed raise rates up to three times next year.
