Gold is back on the defensive within the range after the Senate narrowly passed the 2018 budget blueprint by a 51-49 vote. This bolsters hope that the GOP proposed tax reform will be advanced as well, prompting a rebound in risk appetite; as reflected by higher stocks.
Yields have rebounded as well, pulling the dollar higher, which has in turn pressured the yellow metal. The budget blueprint allows $1.5 trillion to be added to the deficit over the next 10-years. This is one of the keys to President Trump’s tax cut, borrow and spend reflation agenda.
Geopolitical risks are likely to limit the downside. Spain is expected to terminate Catlonia’s autonomy tomorrow. CIA Director Pompeo and National Security Advisor McMaster both seemed to suggest a heightened possibility of a military confrontation with North Korea at a security forum on Thursday.
The U.S. calendar is light today with just September existing home sales (-0.9% forecast) and Treasury Budget for September. We’ll also hear FedSpeak from Mester and Yellen.