17-Oct (USAGOLD) — Gold edged closer to the $1700 level in overseas trading, despite a firmer dollar, but momentum remains generally lackluster. The euro retreated into its range after German Finance Minister Schäuble and a spokesman for Chancellor Merkel warned that the 23-Oct summit would not provide a final solution to Europe’s debt and banking crisis.

Spokesman Steffen Seibert said “the chancellor reminds [everyone] that the dreams that are emerging again, that on Monday everything will be resolved and everything will be over, will again not be fulfilled.” A refreshing bit of candor for a change; for even with the promised big bazooka approach, the root causes of the crisis will once again be left unaddressed. Whether it is a kick of the can, or a big blast down the road, there is no-way that everything will be resolved.

In fact, efforts to prevent a Greek default, contagion and a banking crisis are arguably making the problem even bigger. In fostering a negative real interest rate environment, providing endless liquidity and creating ever-more debt, policymakers may be forestalling the day of reckoning, but that day will come.

• US industrial production +0.2% in Sep, in line with market expectations; cap use 77.4%.
• NY Empire State index rose to -8.48 in Oct, below market expectations of -4.0, vs -8.82 in Sep.
• UK Rightmove house prices (nsa) +2.8% m/m in Oct; +1.2% y/y.
• Japan industrial production (sa) for Aug revised lower to 0.6%, vs 0.8% previously.