Gold continues to creep higher, and has pushed to a 2-week high in the Thursday session. In North American trade, the spot price for an ounce of gold is $1267.04, up 0.12% on the day. On the release front, Final GDP looked sharp in the third quarter, as the gain of 3.2% was just shy of the estimate of 3.3%. Elsewhere, the Philly Fed Manufacturing Index jumped to 26.2, above the forecast of 21.5 points. However, unemployment claims disappointed, climbing to 245 thousand. This was much higher than the estimate of 232 thousand. On Friday, there are three key events in the US – Core Durable Goods, New Home Sales and UoM Consumer Sentiment.
Tax reform was a major theme for President Trump during the election campaign. Just one year in office, Trump and fellow Republicans are celebrating passage of their landmark tax reform legislation, marking Trump’s first major legislative victory in office. On Wednesday, the House of Representatives voted to pass the tax reform bill, after it narrowly passed in the Senate, by a vote of 51-48. Trump is expected to sign the bill into law next week. The tax legislation marks the first major overhaul of the US tax code in 30 years, and reduces corporate taxes from 35% to 21%. After failing to overturn Obamacare, the Republicans finally scored a big win. The Republicans have promised significant tax relief to the middle class, but polls show that the American public remains skeptical. With congressional elections next November, tax reform promises to be a key issue, and could determine which party will control Congress in 2018.
With the US economy posting growth above 3% for another quarter, the Federal Reserve remains on track for another rate hike in January. The CME Group has pegged the odds of a January hike at 98%, and if the economy continues its current pace, the Fed could raise rates up to four times in 2018. Inflation remains a sore point, as the Fed target of 2.0% remains well out of reach. Fed Chair Janet Yellen and other FOMC members have said they expect that the strong labor market will lead to higher inflation, but the Fed has demonstrated that it is willing to press ahead with rate hikes despite low inflation.
