The Daily Market Report: Gold Firms Slightly as Dollar Meets Resistance


USAGOLD/Peter Grant/10-03-17

Gold firmed slightly intraday after eking out a 7-week low in overseas trade. The yellow metal continues to be pressured by heightened risk appetite associated with the President’s tax cut proposal and a firmer dollar.

The greenback has garnered support both from the proposed tax cut and rising expectations that the Fed will lift rates one more time this year, despite persistently weak inflation. The dollar index also set a 7-week high today, shy of good resistance at 94.14.

The overall trend remains unmistakably negative since peaking 103.82 early in the year. That means the dollar index is still down about 10% year-to-date, even after the last 3-weeks of gains.

As noted in this morning’s snapshot, the next big event will be the release of September jobs data on Friday. Expectations are running at just +87k for nonfarm payrolls, factoring in a significant weather related hit. Even if NFP misses expectations, the market may quickly discount the news as temporary hurricane fallout, but will the Fed discount a bad number as well?

North Korea threatened to “bring nuclear clouds to the Japanese archipelago,” while mocking PM Abe as a “headless chicken.” Japan is definitely within missile range and Pyongyang says they will be “the first victim of nuclear disaster in the world.”

Japan called the latest threats outrageous and provocative. I imagine they, along with South Korea, wish President Trump would quit poking the hornet’s nest via Twitter.

Until the U.S. evacuates not essential military personnel and family members from the region, it seems unlikely that the U.S. will initiate any action against the DPKR. However, the constant goading from each side makes the situation inherently unstable and provides an underpinning to the gold market.

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