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This economic data could potentially influence a rate hike

The gold price has eased off after a rally which saw it reach a peak of $1,322.84, with a sell-off in response to the price rise capping any gains made overnight. Spot gold at the time of writing sits at $1,318.18, but ongoing political tension kept prices around the nine and a half month highs gold has been enjoying this week.

Further economic data is due to be released today by the US Department of Labour. The ADP (Automatic Data Processing) report, sponsored by ADP, showed an increased level of job additions to the US economy and higher GDP growth than initially predicted, so investors will be keen to know if the non-farm payrolls revealed today follow suit in casting a positive light on the US economy.

If both sets of data exceed expectations, it could influence the timing of any further interest rate hikes by the Federal Reserve (Fed). Janet Yellen has previously stated that the Federal Reserve wants to trim the Fed’s balance sheet slowly, and that only one more rate rise is due this year. According to CME’s Fedwatch tool, the expectation of the Federal Reserve keeping interest rates at 1.25% stands at 98.6%, but given the surprisingly positive data, this could potentially bring the rise forward.

The North Korean conflict has shown no signs of easing off, as neighbours South Korea and Japan combined air forces yesterday to join two supersonic US B-1B bombers for a training exercise near the Korean Peninsula. South Korea has had a long history of political tension and war with their Northern counterparts, and Japan recently suffered a display of aggression after a North Korean missile travelled over the second largest Japanese island.

The conflict has also dampened US-Russia relations. In the wake of Moscow reducing American diplomatic presence within their borders, the US has told Russia to close its consulate in San Francisco, in addition to locations in Washington and New York which facilitate trade missions.

In mining news Romania’s Prime Minister Mihai Tudose has suggested that his government will withdraw an application to make the area of Roșia Montană an Unesco heritage site, potentially paving the way for mining operations.

Roșia Montană is the largest gold and silver deposit in Europe, containing an estimated 314 tonnes of gold as well as 1,500 tonnes of silver. The prospect of mining is controversial, with heavy environmental damage being the cost for the potentially lucrative operation, which has previously led to a conflict between Canadian Miner Gabriel resources and local Romanians.

According to The Guardian, Gabriel Resources was granted an exploration licence in 1999, and have since invested £540m in the country. This June the firm filed a compensation claim for $4.4bn at the World Bank’s court of arbitration, and many environmental activists suspect Tudose is merely showing a display of goodwill to avoid a legal case.

Photo credit: Avalon_Studio

Link to this article: : http://www.goldmadesimplenews.com/gold/this-economic-data-could-potentially-influence-a-rate-hike-13376/

Posted by on Sep 1 2017. Filed under Gold News, Mining. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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