Gold is unchanged in the Monday session. In North American trade, the spot price for an ounce of gold is $1331.91, unchanged on the day. On the release front, there are no US events on the schedule. On Tuesday, the US releases the Richmond Manufacturing Index.
Will US lawmakers shut down the shutdown? With government non-essential services a standstill for a third day, the Senate is expected to vote on a stopgap spending bill later on Monday. Democrats and Republicans are now playing the ‘blame game’ and pointing fingers at who is responsible for the crisis. The Democrats refused to vote for the spending measure until a deal is hammered out over Daca, a program for children who are illegal immigrants that Trump has threatened to deport. On Sunday, Senate majority leader, Mitch McConnell suggested that he would allow a vote on immigration reform in February if Democrats agree to fund the government. With congressional elections looming, both parties will not want to anger voters, so we could see the crisis resolved this week.
The Federal Reserve was busy in 2017, raising interest rates three times. In January, the Fed began to trim its balance sheet, to the tune of $10 billion/mth. Next up is a policy meeting on January 31. A rate hike is a virtual certainty, with CME Fed Watch pegging the odds of a quarter-point hike at 98.5%. Although this means that a rate hike has been priced in by the markets, the dollar could nevertheless gain ground after a hike, as a rate increase would signify an important vote of confidence in the economy by the Fed Reserve. If the US economy continues to expand at a clip of around 3 percent, there is a strong likelihood of a second rate hike in the first half of 2018.
