Gold continues to march higher, reaching a new 9-week high of 1292.05 and bringing the high for the year at 1296.06 within reach. Silver remains firm above $17.
Geopolitical tensions remain elevated, with President Trump tweeting this morning that “Military solutions are now fully in place,locked and loaded,should North Korea act unwisely.” China has cautioned both sides about the sabre-rattling, but also reportedly have told North Korea that they are on their own if they start a fight with the U.S.
U.S. CPI rose 0.1% in July, below expectations of +0.2%, versus unchanged in June; 1.7% y/y. Core CPI rose 0.1% on expectations of +0.2%, versus +0.1 in June; 1.7% y/y. This latest evidence of waning inflation pressures is likely to further erode rate hike expectations through year-end. It may also give the Fed pause when it comes to beginning the balance sheet unwind this year.
A short-term move in gold above 1296.06/1300.00 would signal that the uptrend this year is back underway. Beyond that level, the next significant tier of resistance is marked by last year’s high at 1375.15.