Gold Continues Fed Driven Rally
The gold market rally was fueled by another plunge in the U.S. Dollar. On Wednesday the Fed raised rates by 25 basis points for the second time in three months, however, it did not indicate any plan to accelerate the pace of monetary tightening.
The interest rate hike came as no surprise, additionally, real yields were pumped up ahead of the rate announcement in expectation of a hawkish hike. Instead, the Fed delivered a dovish message with no change in forward guidance.
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Crude Oil
U.S. West Texas Intermediate and international Brent crude oil futures were little changed on Thursday as investors continued to react to Wednesday’s friendly U.S. Energy Information Administration’s weekly inventories report. It showed that stockpiles fell by 237,000 barrels for the first time in nine-weeks.
The market found further support from the International Energy Agency (IEA). Although global inventories rose in January, the agency said the oil market could be in deficit by 500,000 barrels per day in the first half of 2017.
Economic News
In the U.S. on Thursday, Building Permits came in at 1.21 million units, below the estimate and previous read. Housing starts, however, beat the estimate with 1.29 million units versus 1.26 million units.
The Philly Fed Manufacturing Index continued to show signs of strength, coming in at 32.8. Weekly unemployment claims were 241K, pretty much in line with expectations. The JOLTS Job Openings report showed a 5.63 million increase versus a 5.45 million estimate.
On Friday, investors will get the opportunity to react to a slew of economic data. The major report is the Preliminary University of Michigan Consumer Sentiment. It is expected to come in at 97.1, up slightly from the previous read. Capacity Utilization is expected to come in at 75.5% and industrial production at 0.3%.
Minor reports include the Conference Board’s Leading Index, Preliminary University of Michigan Inflation Expectations and the Labor Market Conditions Index.