Gold price steady amid Bureau of Labour Statistics report, no Fed announcement expected in short term
The Bureau of Labour Statistics (BLS) released its monthly report last Friday, with the ‘US economy creating 227,000 new jobs in January, as jobless rate rises to 4.8%’, according to the Guardian. Whilst this suggests that the US economy is ticking over, the mixed results don’t suggest anything like a short term inflationary surge, nor does this point to influencing any potential interest rate hikes at the Fed’s next announcement.
There doesn’t seem to be a large risk of aggressive monetary tightening with current available information; just two rate hikes are expected in 2017, and modest ones at that.
If the rate hikes do come, it won’t be for a couple of months. We have previously stated that until more of Trump’s economic plan comes to light it is difficult to forecast economic trends, especially concerning gold, however, other policy concerns are also important. Brian Lan, managing director at Singaporean gold dealer GoldSilver Central told Reuters ‘It’s unlikely there will be a rate hike in March as there is too much political unrest in the United States. At least in the first half of the year, gold should do quite well.’ Lan also suggested gold may test $1,230 per ounce.
According to Sethuraman N R of Reuters, the gold price for Monday will climb ‘0.3 percent to $1,222.95 per ounce by 0555 GMT’. The lack of serious movement was attributable to the lack of evidence supporting any short term monetary tightening.
As we reported here, uncertainty around Trump, Brexit and future European elections has caused notable demand increases in gold. The Guardian reported that, according to the World Gold Council, ‘global gold demand rose 2% last year to reach 4,309 tonnes, the highest level since 2013’.
In other news, digitallook revealed that ‘FTSE 100 miner Randgold Resources is to hike its dividend by 52% after an increase in profit and a surge in gold production for the sixth successive year in 2016.’
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