Author Archives: News

The Daily Market Report: Gold Choppy On Mixed Data and Mixed Messages


USAGOLD/Peter Grant/05-23-17

Gold was unable to sustain the earlier intraday rebound, falling back into the daily range. The choppy trade comes as a result of a mixed bag of economic data, dovish FedSpeak, much ado about President Trump’s budget proposal and ongoing concerns about his broader economic agenda.

Markit PMI data were mixed with services better than expected and manufacturing missing expectations. The Richmond Fed index tumbled to 1 in May, below expectations of 15, vs 20 in April. New home sales tumbled 11.4% in April, well below market expectations. It was the biggest drop since March of 2015.

Sales fell in every region of the country, led by a 26.3% plunge in the West, the biggest drop since October 2010. — AP

Minneapolis Fed President Kashkari noted today that inflation is going the “wrong way.” Rising inflation and inflation expectations was the main incentive for the Fed’s move to tighter policy. Kashkari wants to see more data before considering a further tightening of monetary policy in June.

Speaking at the Peterson Foundation Fiscal Summit, Treasury Secretary Mnuchin confessed that “we’re not going to get [tax reform] done by August.” While he’s still hopeful that it will get done this year, there are rumblings that the GOP may have to settle for tax cuts, rather than reforms, but even that may be a heavy lift. There is also talk of combining fiscal spending with any tax bill in an effort to garner support from Democrats.

The bottom line is that the economic agenda seems to be losing additional momentum, and the new budget proposal isn’t going to help the cause. President Trump’s $4.1 trillion budget seems to be overly optimistic about the growth prospects of the U.S. economy. While the budget targets 3% growth, some analysts suggest continued sub-2% growth is the more likely reality. Zerohedge also reported that the administration is perhaps overly-optimistic about how long the current expansion will last.

Given the cuts to entitlements, Democrats are already girding for battle. As that battle rages, the clock will continue tick toward the inevitable next recession. Since the Great Depression, the U.S. has suffered thirteen recessions. The periods of economic growth between recessions have been as long as 120-months, and as short as 12-months. The average is just over 59-months.

The time elapsed since the Great Recession “officially” ended in June 2009 presently stands right at 95-months. To think we can go more than another decade without an economic contraction just might be delusional.

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

Trump’s budget proposal slashes spending by $3.6 trillion over 10 years

Washington Post/Damian Paletta & Robert Costa/05-22-17

President Trump on Tuesday will propose cutting federal spending by $3.6 trillion over 10 years, a historic budget contraction that would severely ratchet back spending across dozens of programs and could completely reshape government assistance to the poor.

…Mick Mulvaney, director of the Office of Management and Budget, said the spending plan, titled “A New Foundation for American Greatness,” is focused on protecting taxpayer money and cutting spending on programs that are ineffective or encourage people not to work.

…The proposed budget refocuses decades of U.S. spending — both foreign and domestic — to reflect Trump’s belief that too much taxpayer money is simply given away.

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Posted in Economy, Politics |

Treasury Sec Mnuchin: “we’re not going to get [tax reform] done by August.”

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Posted in Economy, Politics |

Richmond Fed Index tumbled to 1 in May, well below expectations of 15, vs 20 in Apr.

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Posted in Economic Data |

U.S. new home sales plunged 11.4% to 569k pace in Apr, well below expectations of 612k, vs positive revised 642k pace in Mar.

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Posted in Economic Data |

Trump’s new budget is only good for 1.9% growth rather than 3%, warns ex-OMB director

CNBC/Berkeley Lovelace Jr./05-23-17

President Donald Trump’s budget proposal is likely to help produce 1.9 percent economic growth, not 3 percent, former Office of Management and Budget Director Jim Nussle told CNBC on Tuesday.

Nussle’s comment came the morning after Trump’s proposed fiscal 2018 budget became public. The White House said it is a key component in pushing economic growth to 3 percent.

The Congressional Budget Office currently estimates, however, growth at about 1.9 percent and the Federal Reserve projects the economy will expand at a 1.8 percent annual rate.

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Posted in Economy, Politics |

Gold’s golden cross: The metal just formed a chart pattern that can signal a breakout


CNBC/Gina Francolla & Fred Imbert/05-23-17

Gold is up nearly 10 percent this year and might be primed for more gains if a signal tracked by technical analysts triggered Monday is any guide.

A small gain was enough to push the metal’s 50-day moving average price above the average price of the last 200 days, forming what’s known as a “golden cross” in technical analysis circles. This is seen as a positive signal that demonstrates an asset is outperforming so well in the short-term that it may reverse a longer term downtrend.

PG View: The golden cross occurred in the spot market two-weeks ago, confirmation in the futures offers further encouragement.

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Posted in Gold News, Gold Views |

U.S. Markit manufacturing flash PMI slipped to 52.5 in May, below expectations of 53.0, vs 52.8 in Apr.

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Posted in Economic Data |

U.S. Markit services flash PMI rose to 54.0 in May, above expectations of 53.1, vs 53.1 in Apr.

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Posted in all posts, Economic Data |

Morning Snapshot: Gold recovers from modest overseas losses

USAGOLD/Peter Grant/05-23-17

Gold dipped modestly in the wake of the Manchester terror attack as Sterling fell, pushing the dollar lower. However, market moves in the immediate wake of the attack have largely been reversed. Sterling is now slightly higher on the day, the dollar is back on the defensive and gold is back within striking distance of yesterday’s highs at 1263.76.

The negative dollar and positive gold trends remain intact. Fresh highs this week would shift the technical focus to the high for the year at 1295.03.

Geopolitical tensions rose after the Indian army fired artillery on Pakistani military posts across the “line of control.” The Times of India described it as a “punitive” artillery assault in retaliation for the Pakistan military aiding infiltrators to the Indian side.

The U.S. calendar has April home sales, Markit flash PMIs and the Richmond Fed index. We’ll hear FedSpeak from Kashkari and Harker, as well as ECBSpeak from Coeure.

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Posted in Gold News, Gold Views, Snapshot |

Gold steady as traders lock in profits after two weeks of gains

Reuters/Maytaal Angel/05-23-17

Gold was little changed on Tuesday as the dollar steadied near 6-1/2 month lows and traders locked in profits following two weeks of gains, shrugging off heightened political risk following a deadly suicide attack in Britain.

The blast, which killed at least 22 people, weighed on sterling versus the dollar, but the U.S. currency was flat versus a currency basket following recent sharp falls, leaving little to prompt investors to bet bullion higher.

“Gold is taking a breather once again, its struggling to make it out of this $1,245-$1,265 range,” said Ole Hansen, head of commodity strategy at Saxo Bank.

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Posted in Gold News, Gold Views |

Gold easier at 1260.59 (-2.71). Silver 17.25 (+0.051). Dollar higher. Euro lower. Stocks called higher. U.S. 10-year 2.24% (-1 bp).

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Posted in Markets |

Trump trouble and euro surge extend gold’s gains

Reuters/Peter Hobson/05-22-17

Gold on Monday extended its biggest weekly gain in five weeks as the U.S. dollar fell against the euro, while U.S. political turmoil fuelled demand for bullion as a safe haven and reduced expectations of rapid U.S. interest rate rises.

…The metal advanced by 2.2 percent last week as the furore over U.S. President Donald Trump’s alleged links to Russia and his firing of former FBI chief James Comey raised concerns about his ability to push through promised fiscal stimulus.

That caused a rush to safe-haven assets such as gold and drove U.S. stocks, the dollar and U.S. bond yields lower, reducing the opportunity cost of holding non-yielding bullion and making gold cheaper for holders of other currencies.

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Posted in Gold News, Gold Views |

The Daily Market Report: Gold Firms as Dollar Continues Its Slide


USAGOLD/Peter Grant/05-22-17

Gold remains generally well bid, with last week’s high at 1265.01 within striking distance. Above that — given the favorable technical posture — the high for the year at 1295.03 would be looking pretty attractive.

Political and geopolitical tensions are helping to keep the yellow metal underpinned. Continued pressure on the dollar is helping to buoy gold as well. The dollar index has extended to new 6-month lows toda, pushed by euro gains.

In answering a question as to why Germany continued to maintain a high trade surplus, Angela Merkel said that “the euro is too weak,” suggesting that ECB policy was too accommodative. With more hawkish rumblings emanating from the central bank this year, Merkel’s comment may have lent some credence to calls for some movement toward policy normalization later this year.

If Chancellor Merkel thinks the euro is too weak, and President Trump thinks the dollar is too strong, it seems like there may be a path of least resistance for that currency pair. That would bode well for gold, which is priced in dollars.

Uncertainty about U.S. growth prospects could put further pressure on the greenback if the Fed adopts a more dovish tact later in the year. Right now, markets remain fairly convinced that another 25 bps rate hike is coming in June. Fed funds futures put the probability back at 78%, but chances of an additional 25 bps in September at just 24.5%.

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

Is Silver a ‘Strong Buy’ Right Now? This Analyst Thinks So…


KitcoNews/Sarah Benali/05-18-17

While silver prices seem to be lagging, it may be time for investors to love the grey metal again, one analyst points out.

“Investment in gold (and silver even more so, are worthy of very careful consideration),” said Matthew Worley, research analyst and economic contributor for London-based World First, in a Seeking Alpha post Thursday.

“In an investment environment where central banks have flooded monetary reserves, equities are hitting all-time highs, 10 year U.S. Treasury yields barely eclipse 2%, and real estate markets show excesses internationally, take a long look at assets undervalued and unloved. It just makes sense.”

…“The disparity of the price of silver versus gold is what currently makes physical silver a strong buy,” he added.

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Posted in Silver News, Silver Views |

DPRK’s tenth missile test this year increases tensions with ROK

CGTN/05-21-17

The Democratic People’s Republic of Korea conducted another missile test.

It comes just a week after the U.N. Security Council once again demanded Pyongyang halt its weapons programs.

…The latest launch followed the testing of a mid-to-long range missile just a week ago. The test indicated that Pyongyang had mastered the heat shields that could protect a nuclear weapon on re-entry.

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Posted in Geopolitical Risks |

James Rickards: Gold’s “Decisive Turn Around” – “Next Stop Is $1,300 Or Higher”

MarketOracle/James Rickards/05-22-17

On May 10, gold launched a decisive turnaround from its most recent decline.

This kept intact the pattern I’ve been writing about for weeks of “higher highs, and higher lows” as every retreat finds a footing higher than the one before and each new high reaches new, higher ground.

…Each time gold retreated from those highs, it found a new bottom at a higher price than the time before. The recent low was $1,218/oz on May 10. In this new spike, gold has now rallied to $1,251 as of early Friday.

If this pattern holds, the next stop is $1,300 or higher.

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Posted in Gold News, Gold Views |

Gold tries to add to recent gains as dollar eases, stocks steady


MarketWatch/Rachel Koning Beals/05-22-17

Gold prices firmed Monday, looking to add to the their largest weekly gain since mid-April, as declines in the U.S. dollar index and a modest rise in equities helped to support bids for precious metals.

…Gold scored a roughly 2.1% advance for last week, a trading stretch marked by rising volatility and political unrest in the White House. That was the largest such gain since the week ended April 13. The yellow metal has climbed in seven of the past eight sessions.

Still, “rhetoric suggesting the central bank remains on track to raise rates next month despite recent U.S. political jitters may weigh on gold” as the week goes on, said Ilya Spivak, currency and commodities strategist with Daily FX.

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Posted in Gold News, Gold Views |

Gold regains sheen on global cues, jewellers’ buying

Times of India/05-22-17

Marketmen said a firm trend overseas, as recent political events in the US continued to weigh on the greenback and boost demand for safe-have assets, coupled with pick up in buying by local jewellers at domestic spot markets led to the recovery in gold prices.

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Posted in Gold News, Gold Views |

Morning Snapshot: Gold firms and dollar continues to slide

USAGOLD/Peter Grant/05-22-17

Gold is edging higher, buoyed by new 6-month lows in the dollar index. Silver has regained the 17 handle, rising more than 1% to set new 2-week highs.

The euro jumped in overseas trading after Angela Merkel said the German trade surplus was so high because the “the euro is too weak.” She laid this at the feet of the ECB, which may lend some gravity to speculation about initial moves toward policy normalization later in the year.

The Chicago Fed National Activity Index rose to 0.49 in April, versus a negative revised 0.07 in March. That’s about it today, besides a full raft of FedSpeak from Harker, Kashkari, Brainard and Evans.

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Posted in Gold News, Gold Views, Snapshot |

Euro extends gains to hit fresh 6-month high against US dollar

FT/Mamta Badkar/05-22-17

The euro climbed to a fresh six-month high on Monday as the currency rebounded against the US dollar.

…The moves came after Angela Merkel, the German chancellor, told school students in Berlin that “the euro is too weak”, which she attributed to European Central Bank policy.

“The context she was saying this in was in her description over why Germany has such a high trade surplus but the euro moved anyway,” said Peter Boockvar, chief market analyst at The Lindsey Group.

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Posted in U.S. Dollar |

Gold higher a5 1258.79 (+3.51). Silver 17.09 (+0.205). Dollar lower. Euro higher. Stocks called higher. U.S. 10-year 2.24% (+1 bp).

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Posted in Markets |

The Daily Market Report: Both Technicals and Fundamentals Remain Supportive for Gold


USAGOLD/Peter Grant/05-19-17

The dominant trend in the gold market remains positive, despite the recent multi-week pullback. The yellow metal appears poised to end the week with a 1.8% gain, the biggest in more than a month.

The technical picture remains constructive with gold holding above key moving averages. The 50-day MA remains above the 200-day MA, sustaining the “golden-cross” that occurred late last week. When the 50-day moves above the 200-day moving average, it is typically interpreted as a rather bullish event, hence the name.

Gold is proving quite resilient today in the face of a rebounding stock market. Stocks were lifted by dovish FedSpeak, but heightened political and geopolitical risks are likely to continue underpinning the yellow metal.

St. Louis Fed President James Bullard acknowledged that both growth and inflation data have been pretty soft of late. “FOMC’s contemplated policy rate path is overly aggressive relative to actual incoming data on U.S. macroeconomic performance,” said Bullard.

I have maintained that the primary goals of the Fed’s tightening into weak growth, is to prick the stop market bubble and to replenish the central bank’s ammunition in case of more pronounced growth risks and/or deflationary pressures. Minneapolis Fed President Neel Kashkari warned this week that, “Monetary policy should be used only as a last resort to address asset prices, because the costs to the economy of such a policy response are potentially so large.”

So what is the Fed to do at the June 13-14 FOMC meeting, given still relatively buoyant stocks and the worsening risk that the economy stumbles in the face of the considerable headwinds now facing President Trump’s fiscal policy agenda? Rate hike expectations have ebbed recently, but there’s still several weeks to go before the FOMC convenes.

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

Gold Set for Best Week Amid Geopolitical Turmoil


Bloomberg/05-19-17

In today’s “Futures in Focus,” Phil Streible of RJO Futures discusses the outlook for oil markets and gold. He speaks with Mark Barton on “Bloomberg Markets.”

“Gold looks fantastic at these levels.” — Phil Streible
“Gold/silver ratio at 74 right now, that’s historically on the high end of things. I think it will come back down in the 60s…I think silver could be your next move.” — Phil Streible
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Posted in Gold News, Gold Views |

The Fed may be pushing for interest-rate hikes for the wrong reasons

BusinessInsider/Pedro Nicolaci da Costa/05-19-17

The central bank’s mandate is low, stable inflation and maximum employment, and Fed officials monitor a range of indicators to assess progress on those two goals.

But the Fed may be keen to hike rates for another reason: reigning in what it sees as excessively high prices in stocks and other financial markets.

If that’s its intention, it goes against what Fed Chair Janet Yellen and other key members of the rate-setting Federal Open Market Committee have said they would do.

… Neel Kashkari, the Minneapolis Fed president who is seemingly the last true remaining dove at the central bank, however, makes a solid case in an essay this week as to why this is a terrible idea. Here are his bullet points on the Fed’s limitations from the essay:

1. It is really hard to spot bubbles with any confidence before they burst.

2. The Fed has limited policy tools to stop a bubble from growing, even if we thought we spotted one.

3. The costs of making policy mistakes can be very high, so we must proceed with caution.

4. What we can and must do is ensure that the financial system is strong enough to withstand the inevitable bursting of a bubble.

5. Monetary policy should be used only as a last resort to address asset prices, because the costs to the economy of such a policy response are potentially so large.

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Posted in Central Banks, Markets, Monetary Policy |

Eurozone consumer confidence hits decade high

FT/Mehreen Khan/05-19-17

The good times are back in the eurozone.

A measure of consumer confidence has hit a pre-financial crisis peak this month, reaching its best level in a a decade as the continent has shrugged off populist political risks in 2017.

The European Commission’s monthly sentiment gauge gained 0.3 points to hit -3.3 in May – its best level since July 2007.

PG View: Aside from the negative number itself, this article fails to mention that consumer confidence hasn’t been positive since the euro launched nearly 20-years ago.


source: tradingeconomics.com

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Posted in Economy, Europe |

St. Louis Fed’s Bullard: FOMC’s contemplated policy rate path is overly aggressive

St. Louis Fed/James Bullard/05-19-17

• On balance, the U.S. macroeconomic data have been relatively weak since the March FOMC meeting.
• U.S. inflation and inflation expectations have surprised to the downside in recent months.
• Labor market improvement has slowed over the last two years.
• Low unemployment readings are probably not an indicator of meaningfully higher inflation over the forecast horizon.

• Real GDP growth measured from one year earlier has averaged just 2.1 percent over the last seven years.
• The last two years have shown very little change in year-over-year real GDP growth.
o 2015-Q4: 1.9 percent; 2016-Q4: 2.0 percent.
• A natural conclusion is that the economy has converged upon a growth rate of about 2 percent.
• Is the U.S. economy likely to move meaningfully off of this trend in 2017?
o The short answer is no.

• Financial market readings since the March decision have moved in the opposite direction:
o longer-term yields have declined,
o inflation expectations have weakened, and
o market expectations of the policy rate path have declined.
• This may suggest that the FOMC’s contemplated policy rate path is overly aggressive relative to actual incoming data on U.S. macroeconomic performance.

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Posted in Central Banks, Monetary Policy |

US airstrikes in Syria ‘completely unacceptable’, Russia says

SkyNews/05-19-17

US airstrikes targeting pro-Assad forces close to the Iraqi border have been branded “completely unacceptable” by Russia.

Coalition warplanes targeted a convoy of Syrian government forces and Iranian-backed militia close to the Iraq border on Thursday.

The action was to protect British and American special forces based in al Tanf, southeast Syria.

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Posted in Geopolitical Risks |

Morning Snapshot: Gold recovers from overseas losses as focus remains on political and geopolitical tensions

USAGOLD/Peter Grant/05-19-17

Gold is trading modestly higher after failing to sustain overseas losses. The yellow metal initially dipped to 1245.10 as the dollar staged a rebound, but the gains in the greenback could not be sustained.

Today’s U.S. calendar is empty, so focus will remain squarely on U.S. political turmoil, which is threatening to derail President Trump’s reflation agenda. In the absence of promised fiscal stimulus, the U.S. economy will likely remain confined to tepid growth and perhaps sets the stage for recession.

This will raise doubts at the Fed, as to their next policy move. Continued rate hikes into weak growth certainly heightens the likelihood of recession. How close to the tipping point is the Fed willing to go?

Geopolitical tensions are heightened today as well after U.S. warplanes attacked a pro-Assad military convoy. Both Syria and Russia have condemned the attack. Reports suggest that there may have been Iranian embedded with the Syrians as well.

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Posted in Gold News, Gold Views, Snapshot |

Gold higher at 1253.56 (+4.25). Silver 16.85 (+0.183). Dollar lower. Euro lower. Stocks called higher. U.S. 10-year 2.24% (+1 bp).

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Posted in Markets |