Gold has posted considerable gains at the start of the week. In Monday’s North American session, the spot price for an ounce of gold is $1262.63, up 0.60% on the day. On the release front, the sole US event, the NAHB Housing Market Index, improved to 74, beating the forecast of 70 points. On Tuesday, the key indicator is Building Permits. We’ll also get a look at Current Account and Housing Starts.

Gold prices remain high, but the metal could face some headwinds this week if Congress passes President Trump’s tax reform bill. If this happens, it would mark Trump’s first major legislative victory in office. Thanks to feverish efforts by Republican lawmakers, tax reform is quickly moving through Congress, with a final vote expected this week. The House and Senate have hammered out their differences, and the uniform bill, which must be approved in both houses, is expected to muster the necessary votes, even with all Democrat lawmakers expected to vote against the bill. Crucially, two Republican senators who were opposed to the bill have now lent their support to the bill. The legislation is the first major overhaul of the US tax code in 30 years, and is expected to strengthen the US economy.

The US economy continues to impress, but analysts remain stumped as to why strong growth and a red-hot labor market has not led to higher inflation. The labor market continues to operate at full capacity and various sectors in the economy are reporting a lack of workers. Still, this has not translated into stronger wage growth, despite predictions from Janet Yellen and other Fed policymakers that a lack of workers is bound to push up wages. The Fed appears ready to continue to jack up rates, despite the lack of inflation. The markets are preparing for another quarter-point increase next month, with the odds of a rate hike standing at 98%, according to the CME Group.

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