Turns in the dollar, bond yields and inflation expectations will be driven to an superior extent by oil prices, with net risks pointing to net gold losses, but with cogent support on approach to $1,300 per ounce. Gold remained under pressing early in the week but found support on approach to $1,300 per ounce and snap out of ited to just above $1,320 after slightly weaker-than-expected U.S. inflation statistics halted dollar gains.
Conditions within the U.S. economy will carry on with to be an important market focus given the impact on both the dollar and good rates. U.S. retail sales data are due for release on Tuesday, with the latest shelter starts and industrial production releases on Wednesday. Consumer confidence has swayed firm amid tax cuts, which should have a positive sway on retail spending.
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Industrial take the measure ofs will be important given the ongoing focus on inflation developments. The New York Empire fabricating survey is scheduled for release on Tuesday, with the Philadelphia Fed survey on Thursday. Jobless declares will be released on the same day, with speculation over a very firmly labor market liable to increase if there is no significant increase in affirms, given that the last three readings have been close-fisted 42-year lows.
Comments from Federal Reserve speakers will-power be monitored, although the calendar is relatively light at this stage. Shed weight weaker-than-expected official inflation data have curbed fears that inflation is accelerating, helped prosperity upward pressure on bond yields and curbed dollar gains. If inflation apprehensions intensify, there will be the risk of renewed dollar gains and going pressure on gold prices, although the outlook will be mixed preordained that gold is an inflation hedge.
In this context, developments adjacent the Middle East and oil prices will remain an important focus. A key driver behind the balk in oil prices to three-year highs has been the U.S. decision to pull out of the Iran atomic accord. The decision and threat of renewed U.S. sanctions on Iran has increased reverences over supply disruptions from Iran, which would nurse to put upward pressure on prices. There has also been a wider heighten in fears surrounding Middle East tensions that could position a wider threat to oil supplies.
If oil prices continue to increase, inflation relevant ti are liable to increase. This would tend to be a negative factor for gold if the dollar reinforces, although gold will also gain support on defensive grounds as a hedge against higher inflation and stagflation apprehensions. Potential support for precious metals will be more of a feature if there is a unchanged retreat in global equity markets.