Gold Dinged By Hopeful U.S. GDP

Gold Dinged By Hopeful U.S. GDP

Gold dinged by hopeful U.S. GDP data released this morning, in addition to a jump in private payroll numbers, as investors await a monetary policy decision from the U.S. Federal Reserve this afternoon.

This morning’s report shows that 3rd quarter U.S. economic activity grew at an annualized rate of 1.9%. While that is down slightly from the 2% rise hit in the 2nd quarter, it does beat the 1.6% growth rate predicted by economists polled by Dow Jones.

In October, U.S. companies hired 125,000 employees according to data from ADP and Moody’s Analytics – higher than the forecast increase of 100,000.

But the main event happens this afternoon, when the Fed is widely expected to cut interest rates by 25 basis points for a third consecutive time when policy makers meet. The CME FedWatch Tool showed early Wednesday that 99.5% of investors anticipate the cut with a .5% probability of no change.

Investors are already trying to anticipate whether the Fed will cut interest rates again in December and into 2020 and will be listening for Chairman Jerome Powell’s comments after the meeting. The CME FedWatch Tool shows 100% odds of another rate reduction on Dec. 11. The Bank of Japan also has closely watched monetary-policy decision scheduled for Thursday.

Bullion slipped 1% in the first two days of this week. The most-active December contract dropped 0.3% Tuesday to settle at $1,490.70, the lowest closing level in a week. It’s up 1.2% for the month. Currently, the December contract is at $1,494.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, 0.13% to 917.31 metric tons Tuesday from 918.48 metric tons Monday, Reuters reported.

Silver declined 0.3% Tuesday, with the most-active December contract settling at $17.83 an ounce on Comex. It’s up 4.9% this month. Spot palladium also fell, while spot platinum rose.

Investors are still closely watching U.S.-China trade talks, the latest developments in Brexit and the impeachment inquiry into U.S. President Donald Trump.

Trump and China’s Xi Jinping are set to sign an interim trade agreement Nov. 17 on the sidelines of the APEC summit in Chile if everything “goes smoothly,” the South China Morning Post reported, citing an unidentified source.

U.S. consumer confidence fell for a third consecutive month in October amid concerns about a global economic slowdown and the U.S.-China standoff, according to data released Tuesday by the Conference Board. Both countries are scheduled to report key monthly manufacturing data at the end of this week, which may indicate how much the trade standoff has affected them.

The U.K. House of Commons on Tuesday voted in favor of a Dec. 12 election to break a Brexit deadlock. An agreement in recent days with the European Union extended the deadline for Britain’s exit from the economic bloc to Jan. 31 from Oct. 31.

Meanwhile, Democrats on Tuesday released the text of a resolution that authorizes the next phase of the impeachment inquiry against Trump.


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