Gold Price Up Before Fed Announcement

December 13th, 2017 by

The markets were keyed in to the conclusion of the FOMC’s two-day meeting this afternoon. The Fed is expected to raise interest rates today, which would make three consecutive years of a December rate hike. The announcement comes at 2 pm EST and marks Chair Janet Yellen’s last press conference as a member of the Fed Board of Governors. Jerome Powell is set to take over as chair in early February.

Spot gold opened slightly higher at $1,244.50/oz while spot silver was mostly flat at $15.70/oz. Platinum traded a bit lower at $875/oz and palladium was back around $1,000/oz.

Aside from the anticipation surrounding the Federal Reserve, several other central banks from around the world will hold their own policy meetings on Thursday.

The other big economic news came from the Department of Labor, which reported that the consumer price index (CPI) rose 0.4% during November. It’s the second indicator this week that—finally—points toward higher inflation in the U.S. This bolsters the Fed’s case for a rate hike.

However, core inflation was only up 0.1%, falling short of estimates. This also shows that much of the increase was driven by higher energy prices. Crude oil inventories fell for the fourth straight week, helping WTI crude advance 1% to $57.70/bbl. Wildfires continued to burn in California for the tenth straight day.

The dollar slipped 0.2% on the DXY index on Wednesday, registering at 93.9. This helped lift to the euro and the pound sterling slightly, while the Japanese yen surged 0.5% to ¥113 per USD. The stronger yen dragged stocks in Tokyo down by the same 0.5% margin. Meanwhile, shares rallied across the rest of the region: the main index in Seoul was up 0.8%, the Shanghai Composite added 0.7%, and shares in Hong Kong jumped 1.6%. European markets traded modestly lower.

The Brexit talks between the EU and Britain continued as both sides are beginning to move closer toward a preliminary agreement. On the other side of the Atlantic, negotiations over the North American Free Trade Agreement (NAFTA) will resume. One of President Trump’s longstanding priorities has been to restructure the sweeping trade deal between the U.S., Canada, and Mexico.

Elsewhere in Washington, the final version of the tax bill currently under debate in Congress is also inching closer to a vote. It appears that the House and Senate are compromising on a 21% tax rate for corporations. This is not as low as initially proposed, but is still a significant tax cut from the current corporate rate of 35%.

Wall St opened solidly in the green, with the Nasdaq leading the way 0.45% higher. Bonds still saw some demand, however, sending the 10-year Treasury yield down two basis points to 2.38%. Tomorrow sees the latest retail sales data released by the Department of Commerce.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.