Gold is stable on Friday, with a spot price of $1222.86 per ounce in the European session. The metal showed little reaction to the results of the Scottish referendum, as the No side won in convincing fashion, garnering about 55% of the vote. The week wraps up with just one US event, CB Leading Index. There are no British releases on Friday.

Scottish citizens went the polls on Thursday in a historic referendum on whether to secede from the United Kingdom. The markets had expected a very close vote, based on polls leading up to the vote. However, at the end of the day, the No side won the vote in convincing fashion, with 55% of the vote, versus 44% for the Yes side. There had been predictions of a financial downturn in the UK if Scotland had voted for independence or if the vote was extremely close. As well, a vote for to secede would have raised thorny financial questions such as what currency would be used by an independent Scotland. So, the wee hours of Friday morning brought a tremendous sense of relief in British political and financial circles after the final votes were counted, as the United Kingdom will indeed remain united.

Earlier in the week the Federal Reserve released its policy statement. The Fed reaffirmed that interest rates would remain ultra-low for a "considerable time" after its asset purchase scheme (QE) ends next month, but surprised the markets in hinting that once a rate hike was introduced, rate levels could move up more quickly than expected. As expected, the Fed trimmed QE by $10 billion/month, and the remaining $15 billion/month is scheduled to be phased out in October.

The US economy has been improving, but weak inflation levels continue to weigh on economic activity. Earlier this week, CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation continues to be a concern and could delay an interest rate hike in 2015.

Gold

XAU/USD 1219.60 H: 1225.54 L: 1218.03

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