Gold is steady on Tuesday, as the spot price is $1248.16 per ounce in the European session. The metal is trading just shy of $1249.71, which marks a 6-week high. Today’s sole release on the calendar is Existing Homes. The markets are expecting the indicator to improve in the September release.
The US dollar posted strong gains against gold in September and early October, pushing the metal below the $1200 level. However, gold prices have since rebounded close to the $1250 level. Why the renewed appetite for gold on the part of investors? A key reason is that the Federal Reserve has put out signals that it may delay changing its monetary stance and raising interest rates. The Fed has noted that there is still slack in the economy and global economic conditions remain weak. A rate hike is still expected in 2015, but the Fed is unlikely to pull the trigger early in the year. With continuing uncertainty about the timing of a rate hike, gold remains an attractive alternative to the greenback.
US releases wrapped up the week on a high note, as UoM Consumer Sentiment climbed to 86.4 points, its highest reading since July 2007. The markets had expected a reading of 84.3 points. This indicates that the US consumer remains optimistic about the economy and is not overly concerned about warnings of a global slowdown. On the housing front, Building Permits and Housing Starts met expectations. Strong US employment numbers continue to drive the US recovery, as US job claims dropped to 264 thousand, marking a 14-year low. The estimate stood at 286 thousand.
XAU/USD 1248.16 H: 1253.78 L: 1244.10
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