The Daily Market Report: Gold Remains Range Bound, Awaiting Fed Chair Nominee and October Jobs Report


USAGOLD/Peter Grant/11-02-17

Gold is holding to the recent range, still awaiting the Fed chair nomination and tomorrow’s release of October jobs data. The dollar is consolidating as well, near 3-month highs after the Fed did nothing yesterday to temper December rate hike expectations.

The BoE did pull the trigger today on their first rate hike since 2007. UK CPI reached 3% in September, arguably cause to tighten, although Brexit related risks still abound. With the Fed on pause since the June hike, and inflation still below target, one has to wonder why the market still sees a December hike as a sure-thing.

The U.S. House tax proposal came in pretty much as expected:

A $1.51 trillion plan to cut taxes for corporations, reduce them for some middle-class families and tilt the United States closer, but not entirely, toward the kind of tax system long championed by businesses. — NYT

The plan is to get a piece of legislation through Congress and to the President by Christmas. If that happens, you can bet it won’t look anything like what was released today. Both Republican and Democrats, along with various special interests and lobbyists will seek to shape that final legislation to their liking in the weeks ahead.

The press is now widely reporting that centrist Fed Governor Jerome (Jay) Powell is a lock to get the nomination to replace Janet Yellen as Fed chair when her term expires in February. Powell is likely to seek to perpetuate the slow and steady normalization process initiated by Yellen.

Markets are anticipating a solid rebound in nonfarm payrolls in October. Median expectations are +318k, with the jobless rate holding steady at 4.2%. That’s a pretty high bar after September saw the first negative payrolls print since 2011. While there is indeed likely to be a post-hurricanes rebound, there is room for disappointment, especially when you consider how far off-base the forecasters were last month.

We may see heightened interest in gold investment if NFP is a miss tomorrow, as that would likely diminish December rate hike expectations. That would put the dollar under renewed pressure, boosting the yellow metal in the process.

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