GOLD Safe Heaven
Gold prices are idling having pulled back from a two-month high as all eyes turn to third-quarter US GDP data. The outcome will offer critical stage-setting for next week’s FOMC monetary policy announcement, which is expected to formalize plans to start tapering stimulus this year with an eye to rate hikes in 2022.
The annualized economic growth rate is expected to tick down to 2.6 percent in the in the three months to September, retreating from 6.7 percent in the prior quarter. That would put the economy essentially on pace with the trend average prevailing in the decade before the Covid-19 outbreak.
While that might sound innocuous, such a result against the backdrop of historic fiscal and monetary stimulus is a worrying sight. This seems particularly so as rising vaccination rates bring broader economic reopening. Leading PMI data chalked up weakness to capacity constraints, labor shortages and price pressures.
Keeping inflation expectations anchored against such a backdrop while supply chains mend is almost certainly on the minds of Fed officials ahead of next week’s conclave. To that end, markets may read a soft result as steeling the central bank’s resolve to trim back support, and sound convincing doing so.
Such an outcome may push the US Dollar higher alongside bond yields, weighing on non-yielding and perennially anti-fiat bullion. Follow-through may be somewhat limited however as traders seek to put the GDP reading in the context of price growth trends. This could delay the fireworks until PCE data hits the tape on Friday.
Technical analysis
We see long chance at 1798 with stop loss at 1793 and target 1811 and then 1814
The annualized economic growth rate is expected to tick down to 2.6 percent in the in the three months to September, retreating from 6.7 percent in the prior quarter. That would put the economy essentially on pace with the trend average prevailing in the decade before the Covid-19 outbreak.
While that might sound innocuous, such a result against the backdrop of historic fiscal and monetary stimulus is a worrying sight. This seems particularly so as rising vaccination rates bring broader economic reopening. Leading PMI data chalked up weakness to capacity constraints, labor shortages and price pressures.
Keeping inflation expectations anchored against such a backdrop while supply chains mend is almost certainly on the minds of Fed officials ahead of next week’s conclave. To that end, markets may read a soft result as steeling the central bank’s resolve to trim back support, and sound convincing doing so.
Such an outcome may push the US Dollar higher alongside bond yields, weighing on non-yielding and perennially anti-fiat bullion. Follow-through may be somewhat limited however as traders seek to put the GDP reading in the context of price growth trends. This could delay the fireworks until PCE data hits the tape on Friday.
Technical analysis
We see long chance at 1798 with stop loss at 1793 and target 1811 and then 1814
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