Gold Slips on Investor Caution

Daily Analysis - 30/10/2017

Three Major Central Banks Meeting Scheduled for the Days Ahead

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Gold edged lower on Monday as investors opted to remain on the sidelines ahead of monetary policy decisions from the Federal Open Market Committee and central banks of UK and Japan. Uncertainty surrounding the naming of the next US Federal Reserve Chair also hurt sentiment as the list of potential nominees narrows.

Gold Bears Regain Market Control


The current week is data heavy, with three key central bank decisions, followed by US PMI's and Friday's nonfarm payrolls figure. With the European Central Bank disappointing investor expectations of a more hawkish policy stance, the US dollar is expected to remain on the front foot, with bullion likely to struggle as a result.

Separately, Reuters reported Friday that US President Donald Trump is leaning towards nominating Fed Governor Jerome Powell as the new head of the US Central Bank. Bullion reversed from the highs of Friday to last trade around the $1270 per troy ounce-zone. Physical demand for the yellow metal continues to remain weak despite a dip in prices, especially when considering second biggest consumer India is witnessing a lull in fresh buying after the end of the festival season peak.

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xauusddaily10302017

S&P 500 Zooms to Record Close After Blowout Tech Earnings


Large gains in tech shares following better-than-expected quarterly numbers from heavyweights Amazon, Microsoft and Alphabet powered the S&P 500 to a fresh record close on Friday. Equities were also boosted by data showing the US economy growing at a robust 3.00% annualized pace for a second consecutive quarter, while the University of Michigan’s Consumer Sentiment Index for October marked the strongest reading in 13 years. E-commerce giant Amazon posted earnings per share of $0.52, widely outpacing the consensus estimate and Reuters estimate of $0.03 per share.

Meanwhile, Microsoft’s stock recorded its biggest one-day gain since October of 2015 after the company crushed forecasts by $0.12 a share. Google-parent Alphabet reported earnings excluding 0ne-time items of $9.57 per share, well above a Reuters projection of $8.33 a share. S&P 500 futures ended Friday at 2578 before pulling back following the weekly reopening.

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sp-dec17daily10302017

Euro Posts its Worst Week of 2017


The continued unrest in Spain’s Catalonia region and a dovish policy decision from the European Central Bank battered the common currency, catalysing its worst week of performance this year. The common currency is mounting a weak pullback in early Monday trade, with short-term market sentiment remaining steadfastly bearish. On Saturday, deposed Catalonia President Carles Puigdemont called for peaceful democratic protests to oppose the Spanish Central Government’s takeover of the region following its unilateral independence declaration.

The Euro was under pressure earlier on Thursday after the ECB said it will halve its monthly bond purchases to €30 billion from January until September 2018. The unexpectedly accommodative move forced investors to bet that the Central Bank would not begin lifting interest rates until 2019. EURUSD was last seen around 1.1610, marginally above the Friday trough of 1.1575.

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eurusddaily1032017

Japanese Consumer Spending Remains Strong


Retail sales in Japan grew at their fastest pace in three months as consumers spent more on daily goods and clothes according to preliminary data from the country’s Ministry of Economy, Trade and Industry. Sales increased at an annualized 2.20% in September following a revised 1.80% rise in August, however, the figure was unable to match the consensus forecast of economists calling for a 2.50% annualized gain.

Sales of daily consumption items advanced 1.20% in September from a year ago, while sales of clothes climbed an annual 5.00%, marking the quickest rate in three months. The latest figures come as the Bank of Japan begins a two-day policy meet on Monday, with the Central Bank expected to signal that it will refrain from expanding stimulus any further for the time being. USDJPY is down in early Asian trade, with the pair currently hovering around the 113.650-mark.

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usdjpydaily10302017

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