The spot price of an ounce of Gold is edging lower over the uncertainties on the next Fed Chair. An ounce of Gold is now trading around $1273 down around 0.25% in the last 24 hours. Gold is definitely under pressure since Donald Trump issued a report stating that he would likely nominate John Taylor as the new head of the Federal Reserve. Indeed Taylor is strong partisan of increasing interest rates to 1.25%.
Gold price also continues to suffer as there is also the fact the North-Korean threat has not been taken seriously by markets and the move towards safe haven that we saw in the precious metal’s prices, going from $1200 to $1325 between July and September, did not continue.
On top of that, there are clear downside pressures despite recent soft data in the US economy. September Building permits slowed down to 1.22 million vs 1.25 estimates. Housing starts also missed the forecasts of 1.18 million with a release at 1.13 million. Nonetheless other data such as the Manufacturing PMI came in better than expectations. The October US Manufacturing PMI index climbed to 54.1 from 53.1 a month earlier. This will likely continue weighing on the gold price at least in the short-term.
As usual markets can turn very positive regarding the US economy and for any US related-news which drive the price of the precious metals lower. We are now entering again in a period of over-optimism. Reloading gold position below $1250 is definitely going to be a great bargain.
By Yann Quelenn