The Daily Market Report: Gold Retreats to 5-Week Lows Ahead of Weekend, FOMC Meeting

24-Apr (USAGOLD) — Gold retreated to new 5-week lows in early New York trading on Friday. With little movement in other markets, the drop in gold appears to be technical in nature.

Talks between Greece and its creditors in Latvia failed to yield any breakthrough and the two sides are no closer to any kind of deal that might save Greece from default. Sources at that meeting say Greek Finance Minister Varoufakis was berated by his counterparts for being ‘a time-waster, a gambler, and an amateur’.

Varoufakis apparently said after the meeting that Greece was willing to compromise to reach a deal. Seems like that’s the kind of thing that should have been brought up in the meeting itself…or any of the innumerable meetings that preceded the one held today in Riga.

The U.S. reported a solid headline durable goods orders for MArch, which rose 4%. However, the rise was driven by was “driven almost entirely by higher demand for autos, commercial jets and military hardware,” according to MarketWatch. With transportation stripped out, orders fell 0.2%. This is further evidence that Q1 GDP is going to come in quite weak. Deutsche Bank cut their estimate from +1.7% to +0.7%.

This all leaves a lot of uncertainty about when the Fed might initiate that first rate hike. Many are already calling for a rebound in growth in Q2, which will keep the Fed on track for lift-off at some point this year. There’s another camp — which includes me — that remains quite skeptical. The ZeroHedge blog reminded us this morning that the last time durable goods ex-trans dropped by this much, the Fed launched QE3.

Today’s move may just have been exaustion. The inability of the gold market to prosecute a serious test of the upside, simply caused the longs to liquidate ahead of the weekend and next week’s FOMC meeting.

With stocks still generally firm near the high end of the recent ranges, yields in check and gold range bound, there’s little incentive for the Fed to offer anything of substance next week. Look for this FOMC to be a nonevent, with no change in policy and no meaningful change to the statement.