Monthly Archives: July 2017

Dollar tumbles on month-end moves, Scaramucci departure

Reuters/Sam Forgione/07-31-17

The U.S. dollar hit a more than 2-1/2-year low against the euro on Monday on month-end portfolio adjustments and uncertainty over the U.S. political outlook after the departure of White House communications director Anthony Scaramucci.

The euro hit more than 2-1/2-year peaks against the dollar earlier in the session on month-end buying and euro zone inflation data that kept expectations for a more hawkish European Central Bank alive. It extended gains to trade as much as 0.8 percent higher against the dollar on the day after the New York Times reported U.S. President Donald Trump had decided to remove Scaramucci.

The White House later said Scaramucci was leaving the job after little over a week. Scaramucci’s departure follows one of the rockiest weeks of Trump’s presidency in which a major legislative effort – a healthcare overhaul – failed in Congress and both his spokesman and previous chief of staff left their jobs.

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Posted in U.S. Dollar |

Gold ends marginally lower but books solid July performance

MarketWatch/Sue Chang & Rachel Koning Beals/07-31-17

Gold futures slipped marginally on Monday but closed out a solid July as the dollar headed for its fifth-straight monthly decline.

…“Gold had increased noticeably…despite what were in fact good U.S. economic data—the U.S. economy grew by 2.6% in the second quarter—because the figures also indicated declining inflation pressure. This reduces the pressure on the Federal Reserve to further hike interest rates in the near future,” said Carsten Fritsch, commodities analyst at Commerzbank.

Fritsch added that the recent rise in gold prices was driven mostly by speculation, citing two sets of data. Within Commodity Futures Trading Commission statistics, net speculative long positions were expanded from 28,900 to 73,600 contracts in the week to July 25. The increase in price after the reporting date suggests that further speculative net long positions have been built up in the meantime, he said. And, according to China Gold Association data, gold demand in China grew by 9.9% year-over-year to 545 tons in the first half of 2017.

According to Jim Wyckoff, senior analyst at Kitco Metals, gold bulls have the near-term advantage. Bulls’ next upside objective lies above chart resistance at $1,300, he said. Bears’ next near-term downside price breakout objective is a close below solid technical support at last week’s low of $1,249.40.

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Posted in Gold News, Gold Views |

The Daily Market Report: Gold Consolidates at High-End of Recent Range


USAGOLD/Peter Grant/07-31-17

Gold is consolidating at the high end of the recent range, underpinned by continued dollar weakness. With the dollar index plumbing 14-month lows, the yellow metal appears poised for further tests of the upside.

Key support in the dollar index is defined by the 91.92 low from May of last year. If this level is ultimately violated, there’s not much in the way of meaningful additional support until the band of congestion between 84.79/78.59 from 2012/2014.

If incoming data continues to suggest the Fed is on pause beyond September, the dollar may well indeed be vulnerable to more significant losses. If that is the case, a definitive move in gold above the $1300 threshold would seem likely.

June PCE data — which includes the Fed’s favored measure of inflation — comes out tomorrow. The chain price index is expected to be unchanged for June, confirming persistent price weakness that we saw as part of Friday’s Q2 advance GDP report. A downside miss could further erode December rate hike expectations and send the dollar reeling. And by extension, gold would continue its trend higher.

June factory orders and services PMI and ISM come out later this week and will give an indication of growth prospects. However, the big report will be the July jobs report out on Friday.

Nonfarm payrolls are expected to be 181k and the unemployment rate is expected to tick lower to 4.3%. Jobs however are the least of the Fed’s worries. Inflation and growth are their two primary areas of concern.

At some point however, they will need to reconcile why such a tight job market — at least as measured by the traditional data — has failed to generate wage inflation and by extension broader price inflation. One thing seems certain, the central bank may well have jumped the gun with their tightening campaign. Unless of course, the sole purpose was to gain a little clearance above the zero-bound so they have room to cut without going negative . . .

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

U.S. NAR pending home sales index +1.5% to 110.2 in Jun, above expectations of +1.0, vs revised 108.6 in May.

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Posted in Economic Data |

Chicago PMI fell to 58.9 in Jul, below expectations of 60.0, vs 65.7 in Jun.

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Posted in Economic Data |

Gold hits highest in nearly 7 weeks on struggling dollar

Reuters/Pratima Desai/07-31-17

Gold prices hit their highest in almost seven weeks on Monday, boosted by a struggling dollar and U.S. economic data that has cast doubt on whether the Federal Reserve will raise rates again this year.

Spot gold was down 0.1 percent at $1,268.00 an ounce at 1117 GMT from an earlier $1,270.98, its highest since June 14. It is on course for a two percent rise this month. U.S. gold futures fell 0.1 percent to $1,267.6 an ounce.

“Dollar weakness is driving the gold price. It’s not just against the euro, it’s against most major currencies,” said Commerzbank analyst Eugen Weinberg. “U.S. politics is a mess and U.S. data has not been inspiring.”

A U.S. currency near 13-month lows against a basket of currencies makes dollar-denominated gold cheaper for holders of other currencies, which could mean stronger demand.

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Posted in Gold News, Gold Views |

Morning Snapshot: Gold remains well bid after solid gains over the previous 3-weeks

USAGOLD/Peter Grant/07-31-17

Gold remains well bid after gaining 1% last week, and more than 4% over the previous 3-weeks. A number of key technical levels have been exceeded in recent weeks, shifting focus to the 1296.06/1300.00 level.

The Fed blinked last week in the face of slowing inflation and persistent tepid growth. After a rather dovish FOMC statement, September rate hike prospects crashed to zero-percent. More recently, they edged back up to 1.4%, but I think we can call September off the table at this point.

While advance Q2 GDP met expectations last week, the negative revision to Q1 growth added further weight to those rate hike expectations and therefore the dollar. Ongoing weakness in the greenback should continue to provide a tailwind to the gold market.

Today’s U.S. calendar has July Chicago PMI, June pending home sales, June ag prices and the Dallas Fed index for July. PCE comes out tomorrow and will likely confirm inflation weakness seen in the advance GDP report. On Friday we’ll get the July jobs report. Expectations for nonfarm payrolls is +181k. The jobless rate is expected to tick down to 4.3%.

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Posted in Gold News, Gold Views, Snapshot |

Gold easier at 1267.94 (-1.00). Silver 16.88 (+0.132). Dollar better. Euro lower. Stocks called higher. U.S. 10-year 2.29% (+1 bp).

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Posted in Markets |

Gold Week in Review (video), July 28, 2017

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Posted in Gold News, Gold Views, USAGOLD TV |

Gold Prices Will Be ‘Explosive,’ Just Wait and See – Jim Rogers


KitcoNews/Sarah Benali/07-28-17

Another bullish call for gold comes with yet another call for a financial meltdown, this time from famed investor Jim Rogers.

The best-selling author expects the next financial crisis to be the “worst” he has ever seen.

“We’ve had economic problems in the U.S. or in North America every four to eight years since the beginning of the Republic so to say that we’re going to have a problem is not unusual,” he told Kitco News from the Freedom Fest conference in Las Vegas.

“I would expect it to start this year or the next…and it’s going to be the worst in your lifetime and my lifetime.”

But, even as Rogers expects gold prices to be “explosive” once this crisis hits, he said he is still not accumulating the yellow metal.

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Posted in Gold News, Gold Views |

Gold’s Summer Lull Might Break Next Week, Investors Eye $1,280

KitcoNews/Anna Golubova/07-28-17

As gold sits near the top of its latest trading range, hitting a new six-week high on Friday, analysts wonder if the yellow metal has more room to grow next week.

Some are feeling bullish on gold, saying that the metal is in an upswing as the U.S. dollar remains weak.

“The correction that we’ve seen in June and July has run its course,” Colin Cieszynski, chief market strategist at CMC Markets, told Kitco News. “The current level is $1,250-$1,265 and gold peaked above $1,265 today, with the next upside level at around $1,280, which is a possibility next week.”

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Posted in Gold News, Gold Views |

Dollar declines as GDP data underwhelms

Reuters/Dion Rabouin/07-28-17

The U.S. dollar was broadly lower on Friday as a combination of underwhelming U.S. economic data and political uncertainty kept traders biased toward the euro and other world currencies.

The euro hit a session high after the release of U.S. second-quarter gross domestic product estimates that largely met economists’ expectations.

Some analysts pointed to a smaller-than-expected increase in U.S. labor costs, but others suggested the data was just an excuse for traders to continue the weak dollar trade that has sent the U.S. currency lower for much of this year.

PG View: Dollar weakness bodes well for the uptrend in gold.

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Posted in U.S. Dollar |

Gold hits new 6-week high above 1270, constituting a convincing break of the 6-year down-trendline off the all-time high.

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Posted in Gold News, Gold Views |

The Daily Market Report: Gold Continues to Trend Higher Ahead of Weekend


USAGOLD/Peter Grant/07-28-17

Gold heads into the weekend on a firm footing, setting new 6-week highs in the wake of this morning’s data. The dollar is back under pressure, erasing most of yesterday’s corrective bounce, which continues to provide a tailwind for the yellow metal.

While advance Q2 GDP met expectations of +2.6%, Q1 was revised lower to 1.2%. ECI missed expectations and there was “a big fall in annual inflation rates across the board,” Commerzbank analyst Carsten Fritsch told Reuters this morning.

The Fed essentially conceded this week that there will be no rate hike in September and that is fully priced into Fed funds futures, which presently show 0% chance of a hike. However, the latest data is going to start chipping away at December rate hike and balance sheet normalization expectations. That probability has already eroded to some degree, from about a 50/50 proposition to 43.7%.

Core PCE — the Fed’s favored measure of inflation — slowed to 0.9% in Q2, versus 1.8% in Q1. Clearly the Fed can no longer dismiss slowing inflation as being “transitory.”

The closely watched by the Fed core PCE q/q rose 0.9% in 2Q after rising 1.8% prior quarter, suggesting lower for longer will persist indefinitely. — ZeroHedge

Monthly PCE for June comes out on Tuesday next week. Expectations remain for further evidence of weak inflation.

Minneapolis Fed dove and dissenter Neil Kashkari will speak later today. It will be interesting to hear what he has to say about inflation and policy normalization prospects for the rest of the year.

It appears the GOP is throwing in the towel on healthcare reform. This was the center piece of their entire agenda since the ACA was signed into law in 2010, suggesting the majority party is severely fractured. This has rather ominous implications for the broader Trump economic agenda. With a debt ceiling debate queued up for after the August recess, we may be in for some real fireworks.

Bottom line, political and economic uncertainty prevails. With gold still below the highs for the year, now is a great time to be building your edge ahead of cyclically strong fall months.

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

University of Michigan consumer sentiment revised up to 93.4 in Jul, above expectations and preliminary print of 93.1, vs 95.1 Jun.

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Posted in Economic Data |

Gold hits 6-week high after U.S. data dampens rate hike expectations

Reuters/Peter Hobson/07-28-17

Gold prices rose to a six-week high on Friday after weaker than expected U.S. inflation dampened expectations that the U.S. Federal Reserve will aggressively raise interest rates.

Data on U.S. second quarter gross domestic product (GDP) and labour costs also pushed the dollar lower, making bullion more expensive for holders of other currencies.

“It showed a big fall in annual inflation rates across the board … so there is no urgency for the Fed to raise interest rates,” said Commerzbank analyst Carsten Fritsch.

…”The US economy remains in growth, but there’s very little sign of inflationary risk in today’s GDP data,” Ranko Berich, Head of Market Analysis at Monex Europe, said in a note.

“It’s difficult to get optimistic about rates or USD off the back of today’s release,” he said.

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Posted in Gold News, Gold Views |

The market doesn’t think the Fed will take away the punch bowl anytime soon — and it’s the Fed’s own doing

BusinessInsider/Komal Sri-Kumar/07-28-17

The Federal Reserve concluded its two-day meeting on Wednesday. Investors had anticipated no change in the central bank’s interest rate policy, nor an imminent decision to shrink its $4.5 trillion balance sheet. They were not surprised. The only significant change in the Fed statement was that the process of not investing all the maturing securities would begin “relatively soon.” At the conclusion of its previous meeting on June 14, the Fed had anticipated that such a tapering would occur “this year.”

Markets took the change in statement to mean that the balance sheet reduction, at an initial slow pace of $10 billion per month, could be announced by the Fed as early as its next meeting on September 20, and become effective October 1. While the pace of not investing all maturing securities would be glacial to begin with, it would be a sea change in policy — after all, the Fed’s asset holdings have been a one-way street since the financial crisis, rising from about $800 billion on “Lehman Day” (September 15, 2008) to its current level of $4.5 trillion. The Fed calls the balance sheet reduction process “normalization,” and the move is supposed to mark the beginning of the end of “emergency” measures that the then chairman, Ben Bernanke, introduced as long ago as January 2009. It has indeed been a long emergency period from the Fed’s point of view!

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Posted in Central Banks, Monetary Policy |

Jeff Gundlach buys S&P 500 puts, eyeing gold


CNBC/Michael Sheetz/07-27-17

“Bond King” and widely followed investor Jeffrey Gundlach recently purchased five-month put options on the S&P 500 index, Reuters reported Thursday. Earlier, the DoubleLine Capital CEO tweeted about gold, a sign he may be getting cautious, or at least partly hedging the equity market here.

Gundlach is trying to capitalize on the lowest CBOE Votality Index level since December 1993, according to the Reuters report.

…Gundlach in an earlier tweet Thursday pointed out that the price of gold is at a “key juncture.”

The chart below illustrates the “coiling,” a pattern similar to a snake ready to strike, which Gundlach referenced.

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Posted in Gold News, Gold Views |

Morning Snapshot: Gold jumps to new 6-week high as Q2 GDP disappoints

USAGOLD/Peter Grant/07-28-17

Gold jumped to a new 6-week high in the wake of this morning’s disappointing Q2 GDP data. The dollar has already retraced most of yesterday’s bounce, lending ongoing support to the yellow metal.

The advance Q2 GDP print was in line with expectations of 2.6%, but Q1 growth was revised back down to 1.2%. ECI rose 0.5%, below expectations of +0.6%, versus +0.8% in Q1.

Perhaps most importantly, core PCE rose just 0.9% in Q2, down from 1.8% in Q1. This is the Fed’s preferred measure of inflation, suggesting that the probability of a September rate hike is properly priced at zero. However, the stark decline is going to start raising doubts about December and the balance sheet unwind as well.

Now the question becomes; is this Q2 rebound in growth — albeit modest — even sustainable? A third of the way through Q3, the data have been less than impressive and let’s be honest, we’re way past due for a recession.

As economic uncertainty persists, gold will continue to attract safe-haven interest. If incoming data continues to disappoint, the yellow metal may really start to run.

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Posted in Gold News, Gold Views, Snapshot |

U.S. Q2 civilian ECI +0.5%, below expectations of +0.6%, vs +0.8% in Q1; +2.4% y/y.

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Posted in Economic Data |

U.S. advance Q2 GDP +2.6%, in line with expectations, vs negative revised +1.2% in Q1.

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Posted in Economic Data |

Gold higher at 1265.72 (+5.34). Silver +16.74 (+0.137). Dollar lower. Euro higher. Stocks called lower. U.S. 10-year 2.32% (+1 bp).

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Posted in Markets |

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 |