Gold could see substantial upside in this run. . . . .

‘The price of gold could see substantial upside as the U.S. dollar index continues sliding in value, some strategists are forecasting. The greenback has declined nearly 9 percent against a basket of foreign currencies year to date as the likelihood of parts of President Donald Trump’s economic agenda getting underway has been called into question, and the prospect of further interest rate hikes from the Federal Reserve has pulled back.”

MK  note:  Nothing new here if you keep up with this page. This forecast says gold could revisit the $1300 level.

INSIGHTS

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Gold breaking above 6-year falling resistance

Kimble Charting Solutions, via ZeroHedge/07-27-17

Below looks at the ratio of Gold compared to the US Dollar over the past 20-years. The ratio reflects that some long-term trends have taken place and the ratio is making an attempt to do something it hasn’t been able to accomplish in 6-years.

The ratio broke above 6-year falling channel back in 2001 at (1) and then it proceeded to rally for the next 10-years.

PG View: Follow the link and check out the chart. It’s a good one.

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Posted in Gold News, Gold Views |

90% of Swiss refined gold moved East. . . .

Lawrie Williams/SharpsPixley/7-27-2017

“The latest figures for gold exports from Switzerland just further emphasise that physical gold is continuing to move eastwards in a big way.  The country’s gold refineries sent 74% of their gold exports to Greater China (the Chinese mainland and Hong Kong) and India alone, while if we add in other south and east Asian nations – Malaysia, Singapore, Taiwan, Thailand and South Korea – and the Middle East – Turkey, the UAE, Lebanon and Jordan – fully 90% of Swiss gold exports that month moved to this region.”

MK note:  Real wealth – and the kind that extends beyond the transient value of currencies – continues to move West to East through the London-Zurich-Hong-Kong-Shanghai pipeline, amounting to 74% of Swiss exports.  Further, Singapore’s Bullion Star reports that the Peoples’ Bank of China is buying gold in the open market, not through the Shanghai Gold Exchange as many previously thought. Of the 2200 tonnes that the SGE reported as sold in 2013, for example, none went to the central bank, according to the SGE.  In other words, all that gold went to the Chinese people and the financial sector.   China. . .a different animal. . .the dragon in the room, and it likes low prices.

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The Daily Market Report: Gold Turns Mildly Corrective as Dollar Catches a Bid


USAGOLD/Peter Grant/07-27-17

Gold has turned mildly corrective as the dollar staged a bounce from the new 13-mnth low set in earlier trading. While this morning’s better than expected U.S. data may have sparked some short covering in the greenback, the more dovish Fed bias suggests that these gains are corrective as well.

In the wake of this week’s FOMC meeting, Fed funds future now put the probability of a September rate hike at 0%. It would seem that markets need to further unwind previous hawkishness, which should keep the dollar under pressure and gold underpinned.

Tomorrow we’ll get our first look at Q2 GDP. Expectations are running at +2.5%. Following this morning’s much better than expected June durable goods orders, the Atlanta Fed’s GDPNow model is now projecting 2.8%. However, that is still way down from early forecasts that were north of 4%.

An miss on growth — certainly anything sub-2% — would likely take a December rate hike off the table. It would also raise considerable doubts about balance sheet normalization commencing this year. That would send the dollar reeling, pushing gold back above $1300 for the first time since last November.

Such a move could signal an early end to the summer doldrums. The quiet summer months has more often than not proven to be an excellent time to buy gold, ahead of the cyclical pressures that tend to drive the price higher in the fall.

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Posted in Daily Market Report, Gold News, Gold Views |

Market hype triggers ‘new major warning’ sign for stocks

CNBC/Jeff Cox/07-26-17

With a fresh round of record-breaking highs in the stock market has come a surge in investor optimism, and that eventually could create problems.

Bullishness in the most recent Investors Intelligence survey hit 60.2 percent, the highest level since late February. The survey comes from editors of market newsletters and thus provides a snapshot of what professional investors are thinking.

Elevated levels of optimism often coincide with market dips. The last time the II survey hit this level, the S&P 500 proceeded to fall nearly 3 percent.

John Gray, editor at II, cautions that the big spread between bulls and bears, who are at just 16.5 percent, is an indicator of potential danger ahead.

PG View
: Stocks are looking awful frothy, rising on both good news and bad…

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Posted in Markets |

Gold hits six-week peak on weak dollar, short-covering

Reuters/Eric Onstad/07-27-17

Gold touched its highest price in six weeks on Thursday, lifted by short-covering and a weak dollar as investors bet that U.S. interest rates could be kept low for longer.

The U.S. Federal Reserve kept interest rates unchanged on Wednesday, but appeared less confident than it had about inflation picking up.

The resulting fall in the greenback is a boon for dollar-denominated gold since it makes the metal less expensive for investors paying in other currencies.

“Gold has been benefiting a lot recently from the weaker U.S. dollar plus some short-covering on the futures market, where you’ve had record short positions,” analyst Carsten Menke at Julius Baer in Zurich said.

“The normalisation of positioning will leave about a 4-5 percent upside from these levels, based on history, which would be towards $1,300.”

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Posted in Gold News, Gold Views |

A hidden driver could send gold soaring


CNBC/Rebecca Ungarino/07-27-17

The price of gold could see substantial upside as the U.S. dollar index continues sliding in value, some strategists are forecasting.

The greenback has declined nearly 9 percent against a basket of foreign currencies year to date as the likelihood of parts of President Donald Trump’s economic agenda getting underway has been called into question, and the prospect of further interest rate hikes from the Federal Reserve has pulled back.

The dollar index could certainly drop to the 92 mark (about 1.5 percent below its closing price Wednesday of 93.40), said Phillip Streible, senior market strategist at RJO Futures. And though these levels are important to watch in the dollar, what’s more interesting to him is the impact on gold prices and other commodities.

“We could really see other markets, like gold, push up through that $1,300 level. We could see silver recapture $18. We could see oil prices — they’ve already got some bullish fundamentals buoying them — but with the dollar selling off like this, you are probably going to see that … recapture $50 again,” he said Wednesday on CNBC’s “Trading Nation.”

PG View: There is nothing “hidden” about recent dollar weakness.

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Posted in Gold News, Gold Views, U.S. Dollar |

Morning Snapshot: Gold remains well bid, even with rebound in dollar

USAGOLD/Peter Grant/07-27-17

Gold continues to pressure the upside in the wake of yesterday’s solid gains. The yellow metal has edged to a new 6-week high today, and is maintaining those gains in the wake of the surge in June durable goods orders.

Durable good orders surged 6.5% in June, well above expectations of +2.8%. That was driven by transportation orders, which rose 19%. More specifically, non-defense aircraft and parts orders were up a whopping 131%.

While the headline number looks great, the ex-trans number was a much more modest +0.2%. Nobody thinks that impressive headline print puts a September rate hike back on the table.

Gold is is holding up nicely, even with the rebound in the dollar from new 13-month lows in earlier trading. The dollar index appears destined to challenge the four-plus year low at 91.92, set in May of last year. That weakness should continue to underpin the yellow metal.

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Posted in Gold News, Gold Views, Snapshot |

U.S. initial jobless claims +10k to 244k in the week ended 22-Jul, above expectations of 240k.

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Posted in Economic Data |

U.S. advanced trade gap narrowed to -$63.9 bln in Jun, inside expectations of -$65.0 bln, vs revised -$66.3 bln.

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Posted in Economic Data |

U.S. durable good orders surge 6.5% in Jun, well above expectations of +2.8%, vs positive revised -0.1% in May; ex-trans +0.2%.

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Posted in Economic Data |

Gold higher at 1263.68 (+3.18). Silver 16.81 (+0.187). Dollar higher. Euro lower. Stocks called lower. U.S. 10-year 2.30% (+1 bp).

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Posted in Markets |

Dollar turns lower after Fed is read as adopting a more dovish tone

MarketWatch/Ryan Vlastelica/07-26-17

The U.S. dollar fell on Wednesday, erasing an earlier gain after the Federal Reserve was seen as striking a somewhat cautious note on inflation, which is seen as bearish for greenback.

The U.S. central bank said inflation was “running below 2%” instead of “running somewhat below 2%,” as it had in its June statement. The Fed’s preferred inflation gauge, the personal-consumption index, or PCE index, has tapered off to 1.4% growth over 12 months from a five-year high of 2.1%.

The Fed also indicated, as expected, that it would start to wind down its bondholdings “relatively soon” and kept interest rates unchanged, as had been widely expected.

PG View: The dollar index tumbled to fresh 13-month lows after the Fed’s announcement, providing on ongoing tailwind for gold.

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Posted in Central Banks, inflation, Monetary Policy, U.S. Dollar |

Gold jumps to 6-week top after Fed statement, U.S. dollar drops


Reuters, via NASDAQ/Marcy Nicholson & Maytaal Angel/07-26-17

Gold jumped 1 percent to a six-week high on Wednesday, after the U.S. Federal Reserve said it would start to wind down its massive holdings of bonds “relatively soon,” pushing the dollar lower.

The U.S. central bank kept interest rates unchanged as expected and said it was continuing the slow path of monetary tightening that has lifted rates by a percentage point since 2015, the Fed said in a statement following a two-day meeting.

…”Gold clawed back recent losses and surged to fresh highs of the rally as the Fed confirmed it was on a summer sabbatical with a safe statement that nodded to lower inflation but was offset by a confirmation that balance sheet tapering would occur ‘relatively soon,'” said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

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Posted in Gold News, Gold Views |

The Greater Moderation

Money Strong/Danielle DiMartino Booth/07-26-17

It’s no secret that the Bank of England, Bank of Japan and European Central Bank have been aggressively flooding their respective economies and in turn, the global financial system, with liquidity in some form of quantitative easing. If there is one lesson to be learned from The Great Moderation, it is that liquidity acts as a shock absorber.

In a less liquid world, the crash in oil prices would have resulted in a bankruptcy bloodbath. In a less liquid world, the bursting of the housing bubble would have led to millions of foreclosed homes clearing at fire sale prices. In a less liquid world, highly leveraged firms would have been rendered insolvent and incapable of covering their interest costs.

In short, a less liquid world would be smaller, for a time. But when the time came to allow nature to take its course, central bankers could not bear the pain, nor muster the discipline, to allow creative destruction to cull the weakest from the herd. Their policies have forced us to pay a dear price to maintain a population of inefficient operators.

So we have one-in-ten firms effectively sucking the life out of the world economy’s ability to regenerate itself. There is no such thing as a productivity conundrum against a backdrop of such widespread misallocation of capital and labor. There is no mystery cloaking the breakdown in new business formation. And there is no enigma, much less any reason to assign armies of economists to investigate, shrouding the new abnormality we’ve come to know as a low growth world.

There is simply no room for an economy to excel when its growth potential is choked off by an overabundance of liquidity that is perverting incentives. What is left behind is a yield drought, one that has left the whole of the world painfully parched for income and returns and yet too weary to conduct fundamental risk analysis.

PG View: This is an excellent essay by former Fed insider Danielle DiMartino Booth. I highly encourage you to read it in its entirety and realize too that, “The Fed’s actions have not saved the little guy; they’ve skewered him.”

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Posted in Central Banks, Monetary Policy, Negative interest rates, QE |

Fed keeps rates unchanged, says balance-sheet unwinding to start ‘relatively soon’

FT/Sam Fleming/07-26-17

The Federal Reserve signaled it is ready to start unwinding its crisis-era stimulus programme as soon as its next meeting, suggesting that the central bank remains confident in the US outlook even as it acknowledges a spate of weak inflation readings.

The Fed kept rates unchanged at 1 per cent to 1.25 per cent at the meeting, as expected by financial markets. But in a sign of resolve on its policy committee, the Fed said in a statement that it was ready to start paring back the size of its balance sheet “relatively soon” as long as the economy stays on track.

PG View: The Fed is more concerned about the decline in inflation, but remains optimistic that it will return to the 2% target in time. Sep rate hike odds dropped from 8.2% to 3.1%.

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Posted in Central Banks, Monetary Policy |

Gold firmed into — and after — the FOMC statement, to approach 5-week highs at 1258.79/90 once again.

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Posted in Gold News |

Fed holds steady on policy, in line with expectations. Overall and core inflation “have declined.” Balance sheet unwind to start “relatively soon.”

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Posted in Central Banks, Monetary Policy |

Something Big, Bad And Ugly Is Taking Place In The U.S. Retirement Market

GoldSeek/Steve St. Angelo/07-26-17

While the highly inflated value of the U.S. Retirement Market reached a new high this year, something is seriously wrong when we look behind the scenes. Of course, Americans have no idea that the U.S. Retirement Market is only a few steps from falling off the cliff, because their eyes are focused on the shiny spinning roulette wheel called the Wall Street Stock Market.

Yes, everyone continues to place their bets, hoping and praying that they will win it big, so they can retire in style. Unfortunately, American gamblers at the casino have no idea that the HOUSE is out of money. The only thing remaining in their backroom vaults is a small stash of cash and a bunch of IOU’s and debts.

…Regretably, Americans have no idea that their monthly retirement contributions are not being saved or stored in a nice gold vault, rather they are being used to pay the lucky slobs who retired before them Now, when I say SLOBS or POOR SLOBS, I am not being derogatory. However, I am using the word as a Wall Street Banker would label those they prey upon.

PG View: The charts presented in this article are a warning to anyone who will be reliant on a 401k or pension once they retire. The time to diversify and reallocate a portion of your retirement savings to a hard asset like gold is now.

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U.S. Treasury’s Mnuchin urges Congress to lift debt limit before recess

Reuters/David Lawder/07-26-17

U.S. Treasury Secretary Steven Mnuchin on Wednesday urged Congress to raise the federal debt limit before lawmakers leave Washington for their August recess to avoid higher interest costs to taxpayers and market uncertainty about a potential default.

Mnuchin told a Senate Appropriations subcommittee that maintaining U.S. creditworthiness was of “utmost importance” and that the United States must pay its bills on time.

“As I’ve suggested in the past, based upon our best estimate at the time, we do have funding through September, but I have urged Congress to take this up before they leave for the recess,” Mnuchin said.

The last extension of the federal borrowing limit expired in March with total debt of around $20 trillion, but the Treasury has extended its ability to issue debt by employing extraordinary cash management measures, including deferring reinvestment in federal employee pension funds and suspending sales of savings bonds and debt instruments to state and local governments.

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Posted in Debt |

The Daily Market Report: Gold Setup Feels Similar to Pre-Crisis Days


USAGOLD/Peter Grant/07-26-17

Gold dipped to a new low for the week in overseas trading, but has since rebounded into positive territory as markets await today’s Fed decision. The yellow metal has been consolidating the last two-weeks of gains so far this week.

The Fed is widely expected to hold steady on rates when they announce policy at 2:00ET today. There is some degree of hope that the Fed will take this opportunity to clarify its policy intentions for the remainder of the year, or at least provide some additional information on balance sheet normalization.

However, in light of the weak inflation and growth data, I suspect the Fed will play this one pretty close to the vest. In other words, the statement will look much like — if not exactly like — the June statement.

Meanwhile, Treasury Secretary Mnuchin is urging Congress to raise the debt ceiling before they all depart for the August recess. “As I’ve suggested in the past, based upon our best estimate at the time, we do have funding through September, but I have urged Congress to take this up before they leave for the recess,” Mnuchin said.

Oh, but that’s not the way Congress operates these days. They’ll take their recess, go do their fundraising and take up the debt ceiling when a crisis is imminent. Make no mistake though, the debt ceiling will be raised or suspended. It always is . . .

Frank Holmes of U.S. Global Investors makes the case that global debt is the “mother of all bubbles.” In the past decade since the financial crisis, global debt as risen by an astonishing $120 trillion to $217 trillion! That’s 327% of global GDP!


“Savvy investors and savers might very well see this as a sign to allocate a part of their portfolios in “safe haven” assets that have historically held their value in times of economic contraction.

Gold is one such asset that’s been a good store of value in such times…” — Frank Holmes

Despite the obvious risks, market volatility continues to plumb historic lows:

And that in and of itself is somewhat ominous. When volatility returns — and you can be sure that is will — it may return with a vengeance.

According to a Bloomberg article today, gold’s 120-day volatility is at levels not seen since 2005. Gold spent much of that year narrowly confined within the $410-$450 range. When it broke out of that range in July of 2005, gold was off to the races, trading as high as $730 in March of 2006. By the fall of 2007 the yellow metal had set new all-time highs above $850 and was on its way to its first foray above $1,000 as the financial crisis truly got underway.

The setup we’re seeing today feels awfully familiar. The calm before the storm is the ideal time to be buying gold, because when the storm is raging, prices and premiums will be a lot higher.

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Posted in Daily Market Report, Gold News, Gold Views |

UK GDP: economy grows by just 0.3% amid ‘notable slowdown’

The Guardian/Larry Elliott/07-26-17

Britain’s economy grew by just 0.3% in the second quarter of 2017 after what government statisticians called a “notable slowdown” in the first half of the year.

The expansion in the three months to June followed 0.2% growth in the first quarter and was in line with City expectations for the eagerly awaited first estimate of the economy’s recent performance.

…Darren Morgan, head of national accounts at the Office for National Statistics, said: “The economy has experienced a notable slowdown in the first half of this year. While services such as retail, and film production and distribution showed some improvement in the second quarter, a weaker performance from construction and manufacturing pulled down overall growth.”

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Posted in Economy |

The ‘mother of all bubbles’ keeps gold in focus


BusinessInsider/Frank Holmes/07-25-17

Today I want to discuss reports that global debt levels are at all-time highs, and what this means for your investment decisions going forward.

…Gold’s medium- to long-term investment case, I believe, looks even brighter. Many unsettling risks loom on the horizon—not least of which is a record amount of global debt—that could potentially spell trouble for the investor who hasn’t adequately prepared with some allocation in a “safe haven.”

According to the highly-respected Institute of International Finance (IIF), global debt levels reached an astronomical $217 trillion in the first quarter of 2017—that’s 327 percent of world gross domestic product (GDP). Notice that before the financial crisis, global debt was “only” around $150 trillion, meaning we’ve added close to $120 trillion in as little as a decade.

PG View: It’s like the financial crisis taught us nothing at all. There is assuredly a day of reckoning coming . . .

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Posted in Gold News, Gold Views |

U.S. new home sales +0.8% to 610k pace in Jun, below expectations of 615k, vs negative revised 605k in May.

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Posted in Economic Data |

Morning Snapshot: Gold remains consolidative ahead of Fed decision

USAGOLD/Peter Grant/07-26-17

Gold continues to consolidate as markets await the FOMC’s latest decision on monetary policy. The policy statement comes out at 2:00ET.

It is widely expected that the Fed will hold steady on policy and provide no additional clues about the timing of balance sheet normalization. Prospects for a September rate hike remains a long-shot.

Economic data will be light today with just EIA crude stocks for last week and June new home sales. A rise to a 615k annual pace is anticipated for new home sales.

The dollar’s decline has taken a pause, but the trend remains unquestionably bearish. Should that downtrend resume, it will provide an ongoing tailwind for gold.

Peter Spina of GoldSeek told MarketWatch yesterday that “the dollar has crumbled while the price of gold has begun inching higher toward a price takeoff trigger that should shoot it higher by $200-$300 an ounce over the coming rest of the year.” While Spina doesn’t specify where that trigger is, I think it lies at 1296.06/1300.00.

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Posted in Gold News, Gold Views, Snapshot |

U.S. MBA mortgage market index +0.4% in the week ended 21-Jul; purchases -2.2%, refis +3.4%.

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Posted in Economic Data |

Gold steady at 1247.34 (+0.40). Silver 16.44 (+0.031). Dollar and euro flat. Stocks called higher. U.S. 10-year 2.32% (-2 bps).

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Posted in Markets |

Gold suffers a second session of losses as investors await Fed update

MarketWatch/Myra P. Saefong & Rachel Koning Beals

Gold prices ended lower on Tuesday, suffering the first back-to-back decline in about three weeks ahead of a midweek policy update from the Federal Reserve.

…A broad measure of the U.S. currency, the ICE U.S. Dollar Index DXY, +0.06% which compares the buck against a half-dozen other currencies, has fallen 1.7% month to date but traded little changed Tuesday. Gold typically has an inverse relationship with the dollar as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies.

Overall, “the dollar has crumbled while the price of gold has begun inching higher toward a price takeoff trigger that should shoot it higher by $200-$300 an ounce over the coming rest of the year,” Peter Spina, president and chief executive officer of GoldSeek.com, told MarketWatch.

PG View: Downticks over the past two sessions have been negligible. In fact, the spot market closed ever-so-slightly higher yesterday.

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Posted in Gold News, Gold Views |

The Daily Market Report: Gold Consolidates as FOMC Meets


USAGOLD/Peter Grant/07-25-17

Gold is consolidating recent gains as the Fed begins their two-day FOMC meeting. While the Fed is not expected to change policy, there is perhaps some scope for changes to the wording of the statement.

Will they make an effort to get September back on the table with a more hawkish tone? Will they concede September and start trying to build expectations for December? My guess is that there is little to no change in the verbiage from June. We’ll find out tomorrow at 2:00ET.

With the dollar still under pressure, the path of least resistance in the gold market remains to the upside. The dollar index set yet another 13-month low today, leaving the 2½-year low from May 2016 at 91.92 vulnerable to a challenge. The last time the dollar index was below 92.00, gold was on its way above $1300.

With expectations of stimulus from the fiscal side continuing to wane, the weakness in the dollar over the past five-months — despite rising rates — probably looks pretty appealing to policymakers. I’m not sure they’d be terribly inclined to upset that apple cart at this juncture.

The ones that are probably upset are the Europeans, which saw their currency surge to 2½-year highs, despite no expectations of imminently tighter policy. Apparently Mario Draghi and the ECB simply weren’t dovish enough last week. The euro is up nearly 11% year-to-date, which is certainly not going to help the export driven European economy.

Do we have the makings for a revived currency war? That may be in the near-term offing as well, even as rumblings of trade-wars echo simultaneously.

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Posted in Daily Market Report, Gold News, Gold Views |

Richmond Fed index rose to 14 in Jul, above expectations of 7, vs positive revised 11 in Jun.

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Posted in Economic Data |