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USAGOLD/Peter Grant/05-24-17
Gold is consolidating within the recent range, buoyed by political and geopolitical concerns and a generally weaker dollar. Persistent expectations for a June rate hike are perhaps limiting the upside at this point.
As we’ve noted in the past, the yellow metal tends to soften into rate hikes and rally afterwards. Traders will be scouring the FOMC minutes of the May meeting later today in an effort to glean additional clues as to the likelihood of a June hike. Fed funds futures put the probability at 83%, which seems to make it a forgone conclusion.
Of course incoming data seems to suggest the Fed should be considering a pause. Minneapolis Fed President Kashkari noted yesterday that the inflation is going the “wrong way.” He wants to see more data before committing to further monetary tightening.
The PMI data that were released yesterday, suggested some downside risk to the May jobs data. Median expectations are presently for a gain of 190k nonfarm payrolls.
While there is some optimism about a Q2 rebound in growth. The Atlanta Fed’s GDPNow model is presently at 4.1%. Goldman Sachs just get their estimate to 3.0%. However, the last actual GDP print was 0.7% in Q1.
Gold may need some fresh impetus to extend the uptrend. That may come on the form of economic data, or new developments on the political/geopolitical front.
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