Gold Heads Higher as FOMC Statement Looms
Washington (Oct 8) Gold continues to move higher on Friday, as the spot price is at $1217.71 per ounce in the European session. The metal has taken advantage of the US dollar losing ground this week and has recovered all of Friday’s sharp losses. In the US, today’s highlight is the minutes of the FOMC’s most recent policy meeting. Traders should treat this event as a market-mover.
US job numbers continue to impress. On Tuesday, JOLTS Job Openings climbed to 4.84 million, up from 4.67 million a month earlier. The indicator is on a strong upward trend, indicative of the US employment sector. Last week, Nonfarm Employment change rebounded in September, climbing to 248 thousand. This exceeded expectations of 216 thousand. The unemployment rate dipped to 5.9%, the first time it’s been below the 6% threshold in over six years. With QE slated to end later this month, the focus will shift to the timetable for an interest rake hike. Strong employment numbers such as these could put pressure on the Fed to make an interest rate move sooner rather than later in 2015, and increased speculation about a rate move will likely boost the dollar even further.
At its October policy meeting last week, the ECB made no changes to interest rates. The central bank did announce it would start buying covered bonds in October and begin ABS purchases in Q4. However, there were no specifics and no mention of any purchase of government bonds. This left the markets underwhelmed by the ECB announcement and the euro remains at low levels. Given that the ECB shows no signs of introducing a full-blown QE, it’s questionable whether ABS will help boost the anemic Eurozone economy, as inflation and growth levels continue to sputter.
Source: FxStreet