Gold has ticked lower in the Wednesday session. In North American trade, the spot price for an ounce of gold is $1324.62, down 0.14% on the day. On the release front, consumer spending was a disappointment, as Retail Sales declined 0.1%, missing the estimate of 0.3%. On the inflation front, PPI dipped to 0.2%, but still beat the estimate of 0.1%. On Thursday, the US will publish employment claims and the Philly Fed Manufacturing Index.
Gold has been drifting for most of the week, continuing the trend which marked the base metal last week. One reason for the lack of movement is that investors are trying to get a handle on what the Federal Reserve has planned under new chair Jerome Powell. The Fed is expected to continue to raise rates gradually, but a strong economy and the massive tax cuts could mean that the hikes will of greater size and frequency in the past. Any hints about rate policy will likely impact on gold, which moves inversely to interest rate levels.
The Federal Reserve is widely expected to raise interest rates next week. According to the CME Group, the odds of a quarter-point raise stand at 89 percent. What can we expect from the Fed during the year? The pressing question is how many rate hikes will we see in 2018. The current Fed projection remains at three hikes, but the superb nonfarm payrolls report last week has raised speculation that the Fed could accelerate the pace to four hikes, which would be good news for the US dollar. Investors will be keeping a close eye on key US data, especially inflation indicators. If these numbers improve, we’re likely to see four rate hikes in 2018.
