Morning Snapshot: Gold remains defensive at low end of recent range

USAGOLD/Peter Grant/10-27-17

Gold remains defensive at the low end of the recent range, weighed by heightened risk appetite and a stronger dollar. Support in the yellow metal is well defined by the 1260.10 (06-Oct low).

U.S. advance Q3 GDP came in better than expected at 3.0%, essentially unchanged from +3.1% in Q2. This will help justify persistently elevated expectations for a December rate hike, even though the absence of inflation continues and that’s the “mystery” that prompted the Fed to pause in September.

The BoJ faces the same problem with October CPI coming in at +0.7% y/y. Don’t expected any move toward tighter policy anytime soon.

The dollar is rallying based on anticipated widening of interest rate differentials. Most of the world continues to lean toward easier policy, while the U.S. is in the midst of a tightening cycle (Sep pause notwithstanding). These dollar gains are keeping a lid on gold for now.

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