Gold has been posting gains since Friday, and the metal is trading at the key level of $1200 on Wednesday. On the release front, In the US, we’ll get a look at important housing data, with the release of Building Permits and Housing Starts. The markets are expecting a slight improvement from both indicators. As well, the Federal Reserve will release the minutes of its October policy meeting.
ECB head Mario Draghi and his colleagues are under strong pressure to “do something” to kick-start the weak Eurozone economy. Deep interest rate cuts haven’t had much effect, so the ECB has purchased covered bonds and asset-backed securities. So far, these securities have been from the private sector, and the ECB could decide to expand these purchases to government bonds, known has quantitative easing. However, there is resistance to quantitative easing from national central banks, such as the powerful Bundesbank. Speaking before a European parliamentary committee on Monday, Draghi said that further stimulus measures could include quantitative easing.
US inflation numbers have been persistently weak, but the news was good on Tuesday, as PPI beat expectations with a modest gain of 0.2%. This marked a 4-month high and beat the estimate of -0.1%. Core PPI, which excludes the most volatile items counted in PPI, posted a gain of 0.4%, above the forecast of 0.2%. This was the index’s best showing since April. We’ll get a look at consumer inflation data on Thursday.
XAU/USD 1200.65 H: 1202.40 L: 1191.55
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