By FX Empire.com
Gold prices rose sharply last week amid the huge wave of optimism that spread across global markets after EU leaders announced plans to ease the European debt crisis and support Greece, which weighed down on lower yielding assets including the U.S. dollar, which fell heavily last week, and accordingly, gold prices were able to rise above $1700 an ounce for the first time in nearly a month.
The highly anticipated EU summit revealed the plans to ease the euro zone debt crisis, which included pledging more support to Greece in addition to agreeing 50% in writedowns to Greek debt, increasing the size of the European Financial Stability Facility EFSF to 1 trillion through leveraging of 4 to 5 times.
The EU deal was highly welcomed by participants around global markets, while data from the United States provided mixed results, where on one hand the Gross Domestic Product advanced estimate for the third quarter showed the U.S. economy expanded by 2.5%, following the prior expansion of 1.3% in the second quarter, while the income report showed personal income remained weak in September, while personal spending improved in line with projections, and the Fed’s favorite gauge for inflation, Core PCE showed inflationary pressures eased in September.
Meanwhile, important fundamentals will be released from all around the globe next week, where the focus next week will turn to Europe’s inflation rates, in addition to the European Central Bank’s rate decision, where the ECB is expected to leave the benchmark interest rates unchanged at 1.50%.
As for the United States, the week is full of important economic fundamentals, where the FOMC rate decision is expected to dominate the highlights early in next week, where some analysts argue that the Fed could embark on another round of quantitative easing, although majority in markets believe the Fed will keep the current monetary policy unchanged. Traders will be also eyeing the Fed’s Chairman Ben Bernanke, as he will deliver the Fed’s latest projections on economic growth, unemployment, and inflation.
After that the attention will turn to the infamous jobs report from the United States, where U.S. employers are expected to add 100,000 jobs in October, compared with the prior increase of 103,000 jobs back in September, however, unemployment is still expected to remain unchanged at 9.1%, since the current rate of job growth remains insufficient to reduce unemployment rates.
Moreover, traders will be also eyeing the G20 meeting on Thursday and Friday, where the G20 delivered a strong statement at their previous meeting, as they committed more efforts to support EU leaders in finding a solution to the euro zone debt crisis.
We continue to expect that gold prices will rise over the coming period, however, we also expect volatility to continue to dominate gold prices, as despite the recent improvement in overall conditions, yet risks are still threatening the progress of improvement, especially as the outlook for global economies remains full of uncertainty, and that should continue to provide gold prices with the safe haven appeal.
See what are the upcoming financial event on the FX Empire Economic Calendar now.
