Phil Carr
The Gold & Silver Club
Gold prices have made a strong recovery from March lows, boosted by President Joe Biden's massive $2.3 trillion infrastructure stimulus plan.
Similar to the $1.9 trillion stimulus plan signed only a few weeks ago – Biden’s new package will involve pumping hundreds of billions of dollars into improving the nation’s aging roads, bridges, schools, railways, waterways, airports and cellular network.
Biden’s multi-trillion dollar infrastructure bill is expected to spur the nation's biggest buying spree in commodities, which further suggests that we could be on verge of a supercycle, as demand outstrips supply this year.
Looking ahead to this week, trader’s attention has now shifted to Minutes from the Federal Reserve’s most recent meeting on monetary policy, due for release on Wednesday. The minutes are expected to provide some clarity into continuing debates at the central bank about the trajectory of the economic recovery, inflation and the recent rise in U.S borrowing costs.
Other key macro events this week will include; speeches from various FOMC members, the ISM Non-Manufacturing Report and PPI data.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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