Gold has started the week with losses. In Monday’s North American trade, the spot price for an ounce of gold is $1341.32, down 0.62% on the day. On the release front, Personal Spending slowed to 0.4%, shy of the estimate of 0.6%. On Tuesday, the key indicator is CB Consumer Confidence and President Trump will deliver the State of the Union address.
January has been good to gold, with the metal climbing 2.8% during this period. Gold prices touched $1366 last week, its highest level since August 2017. The US dollar selloff was in full flight on Wednesday, as the dollar tumbled against gold and major currencies following comments from US Treasury Secretary Steven Mnuchin. Speaking in Davos, Mnuchin said that the US was comfortable with a low dollar. This drew a rebuke from ECB President Mario Draghi, who accused the US of targeting the exchange rate. Mnuchin sheepishly backtracked, claiming his remarks had been taken out of context and that he was in favor of a stronger dollar.
In the US, recent GDP releases have pointed to strong growth of 3% or higher. This resulted in some disappointment on Friday, as Advance GDP came in at 2.6%, short of the estimate of 3.0%. The economy grew 2.3% in 2017, compared to 1.6% in 2016. Growth in Q4 was affected by stronger consumer spending, which led to a surge in imports. At the same time, the increase in consumer spending also boosted inflation, as the personal consumption expenditures index, which the Fed prefers to use, rose 1.9% in the fourth quarter, up from 1.3% in Q3. A strong US economy has boosted the manufacturing sector, as durable goods orders in December hit 2.9%, crushing the estimate of 0.6%. This was the highest gain in six months, and helped make 2017 a banner year. Durable good orders increased 5.8% in 2017, the sharpest expansion since 2011.
