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.
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.
Gold continues to consolidate as markets await the FOMC’s latest decision on monetary policy. The policy statement comes out at 2:00ET.
It is widely expected that the Fed will hold steady on policy and provide no additional clues about the timing of balance sheet normalization. Prospects for a September rate hike remains a long-shot.
Economic data will be light today with just EIA crude stocks for last week and June new home sales. A rise to a 615k annual pace is anticipated for new home sales.
The dollar’s decline has taken a pause, but the trend remains unquestionably bearish. Should that downtrend resume, it will provide an ongoing tailwind for gold.
Peter Spina of GoldSeek told MarketWatch yesterday that “the dollar has crumbled while the price of gold has begun inching higher toward a price takeoff trigger that should shoot it higher by $200-$300 an ounce over the coming rest of the year.” While Spina doesn’t specify where that trigger is, I think it lies at 1296.06/1300.00.
Gold has rebounded from modest overseas downticks to trade little-changed on the day, as the dollar continues its slide. The dollar index has fallen to fresh 13-month lows, making the 2½-year low at 91.91 look increasingly attractive.
Last week’s gains in gold returned considerable credence to the uptrend that has emerged so far this year. While there are several additional tiers of resistance above the market, dollar weakness should help keep gold underpinned.
The Fed’s 2-day FOMC meeting begins today and the policy statement will be released tomorrow at 2:00ET. The Fed is widely expected to hold steady on policy. While I think they will keep their cards close to the vest, the market will be looking for clues as to the likelihood of a September rate hike. Fed funds futures put the probability at just 8.2%.
Later this morning we’ll see Case-Shiller and FHFA home prices for May. More gains in both are expected. We’ll also get July consumer confidence and the Richmond Fed index. The former is expected to ease modestly, while the latter is expected to come in steady.
Gold begins the week much as it ended last week, pressuring the upside. The 5-week high at 1258.90 is under pressure this morning as the dollar continues to plumb new 13-month lows.
The yellow metal took out several important technical levels last week, which has returned considerable credence to the underlying uptrend. The next tiers of resistance we’re watching are 1260.96 and 1267.79.
June existing home sales and Markit PMI are out later this morning. Focus however this week is on the two-day FOMC meeting that begins tomorrow.
While the Fed is not expected to do anything at this meeting, the market will be hoping for some indication of their intentions for September. At this point, the market is pretty convinced that that the Fed is on pause through September.
At the end of this week, we’ll get the advance report on Q2 GDP. Expectations are running at +2.5%.
Gold has extended to the upside, slightly exceeding the important 1248.08/1250.13 resistance zone as the dollar continues to slide. A more definitive breach of this resistance area would return considerable credence to the underlying uptrend.
The dollar index has fallen to 13-month lows amid a growing certainty that a September rate hike is off the table, and rising doubts about December. The EUR-USD jumped to a 23-month high. That’s probably not what the ECB was expecting when they maintained their über-accommodative policy stance yesterday. Apparently they weren’t dovish enough . . .
As there is no U.S. data out today, I’ll take a moment to report Canadian CPI, which fell 0.1% in June. The annualized pace of consumer inflation slowed to 1.0%, versus 1.3% y/y in May. It seems our friends to the north are dealing with similar issues: a central bank that is raising interest rates into price weakness.
Gold has once again rebounded from modest overseas downticks to keep the pressure on the upside. The dollar gave back earlier gains, keeping focus on the downside, which bodes well for the yellow metal.
The ECB held steady on policy today, as was widely expected. More importantly perhaps, there was no hint of QE tapering in the policy statement. That initially pushed bund yields and the euro lower, but those losses could not be sustained as Mario Draghi began to speak. Despite his foot still being on the monetary gas pedal, he remains optimistic about the European economy. While Draghi claims tapering scenarios are not being discussed, markets appear to be expecting to hear something on that front come September.
On gold we’re still eying resistance at 1248/1250. A push through this zone would return considerable confidence to the uptrend that has dominated this year.
Initial jobless claims fell more than expected last week to 5-month lows. The Philly Fed index tumbled to 19.5 in July, below expectations of 22.5, versus 27.6 in June.
Gold corrected modestly in overseas trading, but is now back in positive territory, pressuring yesterday’s high. Amid ongoing dollar weakness and political uncertainty, the bias for the yellow metal is to the upside.
Housing starts in June rebounded more than expected, which seems like the first bit of good economic news we’ve seen in a awhile. However, the trend is pretty flat and home builder confidence has tumbled recently.
The dollar remains defensive in the wake of recent weakness in inflation data, which has caused the deterioration of September rate hike expectations. In an article today, Jim Richards contends that the Fed has already raised the white flag and is unlikely to hike rates again before December.
As that realities sinks in, the dollar will likely slip further, adding further buoyancy to the yellow metal. The 1248/1250 technical resistance zone is the next hurdle to clear.
Gold is climbing for a third consecutive session, with the dollar remaining under broad pressure. More weak inflation data further erodes September rate hike expectations adding additional weight to the greenback.
Both U.S. import and export prices fell in June, missing expectations. That drove the dollar index to pressure 11-month lows at 94.46.
Recent gains in the yellow metal suggest that those that were long gold in anticipation of inflation — the so-called Trumo reflation trade — have likely exited the market. The buyers now are probably those with the mindset that realize the Fed was never going to get the inflation they desired with the dollar at 14-year highs.
Not only are there mounting expectations that the Fed will pause, but once again there are rumblings that they may have to reverse course. At this point, the Fed has only half the 300 bps they historically need to deal with a recession. That is, unless they go negative.
It looks like the latest iteration of the GOP’s healthcare bill is dead in the water, without the votes to clear the Senate. That does not bode well for the broader Trump agenda. Without any help on the fiscal side, the onus falls on monetary policy once again to underpin the economy.
Gold extended to the upside in overseas trading after posting solid gains on Friday. That puts the yellow metal convincingly back above its 200-day moving average.
Gold is being supported by diminished September rate hike expectations in the wake of recent weak data, which is pressuring both yields and the dollar. This morning’s plunge in the Empire State Index adds to the feeling that the economy may be stalling-out.
Further weakness in prices is expected to be revealed in June import and export prices tomorrow. On the heels of soft PPI and CPI data last week, hope for targeted 2% inflation seems to be evaporating.
Gold is rebounding following more disappointing U.S. data. The dollar is plumbing the recent lows as September rate hike expectations have deteriorated further.
Resistance defined by the 1229.37/63 zone is under pressure. If gold breaks through this first tier of resistance, focus would shift to the halfway back point of the decline from just in front of $1300.
U.S. CPI came in unchanged in June, below expectations of +0.1%. The annualized rate slowed to 1.6%, down from 1.9% in May. Core CPI was +0.1% in June, on expectations of +0.2%. Zerohedge reports that this was the fourth consecutive monthly miss on CPI with consumer inflation at the lowest level since January 2015.
Adding insult to injury, June retail sales fell 0.2%, below expectations of +0.1%. Ex-auto also came in at -0.2%, on expectations of +0.2%. This is likely to result in further downgrades to Q2 GDP expectations.
The Fed may continue trying to convince us that this weakness is “transitory,” but markets are clearly starting to have their doubts. If the Fed is truly data dependent, I think a September rate hike is off the table. A hike in December will become increasingly dubious.
Gold is slightly higher, buoyed by a softer dollar and further confirmation that inflationary pressures are on the wane. The yellow metal still needs to clear nearby resistance at 1229.37 to ease pressure on the downside.
Headline and core PPI edged up just 0.1% each in June. Annualized PPI slowed to +2.0%, down from 2.4% in May. Core CPI fell to 1.9% y/y, versus 2.1% y/y in May.
Looking ahead to tomorrow’s CPI report, more bad news on the inflation front seems likely. Hence, it should come as no surprise that Fed chair Yellen made note of “risks around the inflation outlook” in her testimony yesterday.
“We’re watching this very closely and stand ready to adjust our policy if it appears the inflation undershoot appears consistent,” said Yellen. And yet, there seems to be some expectation that she will walk back that dovishness somewhat when she testifies today. That perhaps becomes somewhat harder in light of the PPI data.
If CPI data misses expectations, further erosion of September rate hike expectations would be likely. Those prospects are presently 13.3%; effectively off the table, at least in the minds of the markets.
Gold is defensive at the low end of the recent range, after June jobs data came in better than expected. The beat may boost expectations of a September rate hike, although jobs has never really been the issue. Inflation and growth are the issues and both remain subdued.
June nonfarm payrolls came in at +222k, above expectations of +180k. May was revised up to 152k, from 138k previously.The jobless rate edged higher to 4.4%.
However, hourly earnings rose 0.2%, below expectations of +0.3%. May was revised down to just +0.1%. Average workweek ticked up to 34.5 hours. That does not bode well for higher inflation.
We’ll see how the market digests these mixed data. June PPI and CPI are out next week and both are expected to slow again notably.
Silver flash crashed more than a dollar overnight, before rebounding just as quickly. Reportedly 8500 futures contracts were dumped in just several minutes.
Gold is consolidating at the low end of the recent range, weighed by the ongoing rebound in yields. However, despite a new 2-month high in the 10-year yield, the dollar index is back under pressure.
The ADP employment survey disappointed this morning, coming in at +158k jobs. That was below expectations of +189k. This perhaps sets up some downside risk for tomorrow’s U.S. jobs report, where nonfarm payrolls are presently expected to be +180k.
Initial jobless claims for last week were greater than expected and the trade deficit narrowed near expectations. Also on the calendar for today at services PMI and ISM, as well as EIA crude stocks and M2. We’ll also hear FedSpeak from Stanley Fischer.
Gold remains on the ropes after getting slammed in thin holiday trading on Monday. The yellow metal has slightly exceeded Monday’s low this morning, notching a new 8-week low.
Recent upward pressure on global yields and a rising dollar have weighed on gold of late, but it has taken aggressive selling in thin market conditions to really knock the yellow metal lower. Gold had actually shown good resilience in the face of the former, with a myriad of political and geopolitical risks acting as counterbalances.
May factory orders are out later this morning and then we’ll see the the FOMC minutes from the June meeting this afternoon. The market is keying on the minutes, hoping to get a better feel for the Fed’s intentions in September.
Gold remains defensive within the range, heading into the pre-holiday weekend. U.S. markets will be open on Monday, July 3, although hours will be abbreviated. I suspect trading will be thin until Wednesday next week.
The greenback has caught a little bit of a bid, moving the dollar index of the the 8-month lows set yesterday. While dollar gains a likely only corrective in nature, it has applied a little additional pressure to gold.
Personal income for May rose 0.4%, just above expectations of 0.3%, but April was revised lower. PCE edged up 0.1%, in line with expectations. We’ll also hear FedSpeak from St. Louis Fed’s Bullard.
Manufacturing ISM for June and May construction spending will be reported during Monday’s holiday shortened session.
Gold is back on the defensive after this morning’s positive Q1 GDP revision. Growth in the first 3-months of the year was revised to 1.4%, above expectations of 1.2%.
U.S. yields have rebounded from recent lows, which has moved the dollar off the fresh 8-month lows established in earlier trading. Nonetheless, the dollar index is still trading lower on the day. Persistent weakness in the greenback should help to limit the downside in gold.
Initial jobless claims rose 2k to 244k last week. Continuing jobless claims rose 6k to 1948k. Later this morning we have the Bloomberg consumer comfort index, M2, Ag prices and EIA natural gas stocks. We’ll also hear FedSpeak from St. Louis Fed President Bullard.
Gold is slightly higher, underpinned by fresh 7-month lows in the dollar index. The greenback is being pressured by dwindling expectations that the Trump reflation agenda will be advanced this year.
The ECB tried to soften Mario Draghi’s taper-talk from yesterday, saying that the markets misjudged his comments and his intent was to be more balanced. While that knocked the euro off the 12-month highs set earlier in the session, the trend in the euro remains positive. And that’s going to weigh on the dollar.
The market also continues to digest the hubris of Janet Yellen when she said another crisis was unlikely to happen in this lifetime. That’s an awful lot of faith in policymakers’ abilities to keep all the plates spinning, even as the number of plates (debt) continues to expand.
The U.S. trade deficit narrowed modestly in May, coming in near expectations. Later this morning we have NAR pending home sales and EIA data. Tomorrow we’ll get the third look at Q1 GDP and I’m expecting a downward revision.
Gold is recovering from yesterday’s “mysterious” flash crash. The yellow metal is now nearly $15 off of yesterday’s intraday low and has come within $4 of a full retracement of the plunge.
What of course is really mysterious is that there is never a flash rally in the paper market. Whether by accident or with intent, it’s always a massive sell order that hits the market. Invariably though, such losses can not be sustained.
Today we’ll see the April Case-Shiller home price index, along with June consumer confidence and the Richmond Fed index. We’ll hear FedSpeak from Yellen and Harker in London and Kashkari is speaking at a townhall this evening.
Gold sold off sharply in Europe as big sell orders hit the market. Reportedly 18,000 gold contracts ($2 bln notional) were dumped in a 1-minute period. However, the 1241.30/1235.82 support zone we were watching has contained the downside thus far.
According to Zerohedge, “With no clear driver for the move, Bloomberg has suggested it may be a “fat-finger” mistake, although many are skeptical and see either algo or central bank intervention…” If it was indeed a mistake, one might expect retracement over the short-term.
Weaker than expected durable good orders and a miss on the Chicago Fed’s national activity index should help the cause as these data perpetuate concerns about the true health of the U.S. economy. Today’s sell-off may prove to be a great buying opportunity.
Gold is trading higher on the week, thanks to a rebound from Wednesday’s low. There was actually a key reversal on Wednesday (lower low, close above the previous session’s high), which is generally a pretty reliable technical signal.
That seems to be playing out, although a push above the 1261.78 retracement level is needed to lend credence to the belief that the low is in. The series of higher highs and higher lows prevails.
I don’t post a lot of Canadian economic data, but I did put up CPI this morning. Canada is facing the same inflation dilemma that the U.S. is facing. CPI fell 0.2% in May, slowing to 1.3% y/y. The Canadian dollar immediately sank as expectations for a BoC rate hike evaporated.
On the U.S. calendar, we’ll see May new home sales and Markit flash PMIs.
Gold is modestly higher after the recent string of losses stalled shy of trendline support and the 200-day moving average. A slightly lower dollar and a host of uncertainties in the the economic, political and geopolitical realms are all helping to underpin the yellow metal.
Initial jobless claims edged higher last week. FHFA home price index rose in April. We’ll see leading indicators for May and M2 for last week later this morning, as well as FedSpeak from Governor Powell.
Gold is maintaining a generally defensive tone, edging once again to 5-week lows on weak momentum. A firm dollar and stocks are weighing on the yellow metal, while a myriad of economic, political and geopolitical risks provide underpinning to the market. I’m watching support marked by the 200-day moving average at 1236.12.
With recent FedSpeak echoing the hawkish tone of last week’s policy statement, traders are still unwinding some of their short dollar exposure. Those short positions were predicated on an expectation that the Fed would take a more dovish tone in the wake of recent weak data.
That didn’t happen. If fact, the Fed arguably turned more hawkish in an effort to keep a September hike on the table.
May existing home sales and EIA crude data are on the calendar for later today.
Gold is modestly higher to start the U.S. session. The yellow metal is better today, despite a higher dollar and another rise in stocks. These are factors that weighed on gold yesterday.
With political and geopolitical risks elevated, we may be seeing an uptick in demand for safe-havens. Firmer bonds offer some confirmation.
The U.S. Q1 current account gap widened to -$116.8 bln, inside expectations of -$123.6 bln, versus -$114.0 bln in Q4-16. That’s it for today’s economic calendar.
Boston Fed hawk Rosengren speaking at the Riksbank in Sweden warned that low rates put economies at risk and make fighting future recessions more difficult. This is reflective of my own explanation as to why the Fed is tightening policy into economic weakness. They are preparing for the next recession, that we all know is coming.
We’ll also hear Fedspeak from Fischer, Evans, Kaplan and Powell. I suspect the general theme will center on an effort to bolster confidence in at least one more rate hike this year.
This tweet from yesterday caught my eye. This too is consistent with my own views of FedSpeak. Don’t believe a word they say. The truth is in the data . . .
Gold is modestly lower to start the week, eking out a new 3-week low. The yellow metal is being weighed by a firmer dollar, and improved risk appetite that has lifted stocks.
Hawkish comments from NY Fed President Dudley, suggest that the Fed will continue on the tightening path. Despite recent soft data, Dudley said that “halting (the) tightening cycle would imperil the economy.”
Dudley believes that inflation will pick-up as the labor market continues to improve. However, the jobless rate hit a 16-year low in May at 4.3%. How much room for improvement is there really?
If Dudley’s comment are indicative of FedSpeak moving forward, it means they are trying to keep a September hike on the table. We’ll hear from Chicago Fed’s Evans this evening.
The U.S. economic calendar is empty today. In fact, this week is pretty quiet.
Brexit negotiations began today. In light of the recent political weakening of Theresa May, an event that was already fraught with uncertainty is now even more uncertain. This should help limit the downside in gold.
Additional underpinning for gold is found in the broad political and geopolitical uncertainty. With the Trump economic agenda foundering and the Fed proceeding with the removal of accommodations, the U.S. economy may be in considerable jeopardy.
Gold has firmed modestly ahead of the weekend, but appears poised to close lower for the week. At this point, the yellow metal is only down about 0.7% on the week.
U.S. housing starts plunged 5.5% to a 1.092M pace in May, below expectations of 1.218M, vs negative revised 1.156M in April. It was the third consecutive monthly decline, which has happened since January 2009. Permits tumbled 4.5% to 1.168M, which was well below expectations as well.
The preliminary University of Michigan consumer sentiment read for June comes out later this morning. A slight rise to 97.2 is expected. While consumer sentiment seems to remain fairly robust, the retail sales print from earlier in the week suggest they’re disinclined to actually consume anything.
Political and geopolitical risks remain elevated, which has helped underpin gold, despite this week’s more hawkish than expected Fed. Once the market starts discounting the Fed’s unfounded optimism, the yellow metal is likely to recover.
Gold extended to the downside after the Fed maintained that they’re on track for at least one more rate hike this year. This has prompted a rebound in the dollar and pushed the yellow metal low.
However, any economic optimism the Fed has seems to be unfounded. I think at best, you could call the data uneven, at worst it is reflective of a moribund economy that may be moving toward a tipping point.
The Empire State Index and Philly Fed Index both beat expectations. Initial jobless claims for last week came in below expectations. Industrial production was unchanged in May, below expectations. Both import and export prices came in significantly below expectations, adding credence to the argument that the Fed should really be worried about waning inflation pressures.
While the Fed did indeed lower their inflation projections for this year, they continue to expect the 2% target to be achieved in 2018 and 2019. I wouldn’t be so sure about that . . .
Beyond the economic data, considerable political and geopolitical uncertainty prevails. That suggests the downside in gold is likely limited from here.
Gold has surged in the wake of this morning’s soft economic data. The shooting in Alexandria, Virginia at a Congressional baseball practice may be contributing a safe-haven bid as well.
U.S. retail sales fell 0.3% in May, below expectations of +0.1%. It was the biggest drop in 16-months. Retail sales excluding autos fell 0.3%, on expectations of +0.2%.
U.S. CPI fell 0.1% in May, below expectations of unchanged. More importantly, the pace of consumer inflation slowed to a 1.9% annual pace, down from 2.2% in April. Core inflation slowed to 1.7% y/y, from 1.9% y/y in April.
These weak data raise serious doubts about further monetary tightening beyond today’s FOMC decision, and markets are reacting accordingly. Gold is up more than $10. The dollar index has tumbled to fresh 7-month lows. U.S. yields have plunged.
This adds an additional level of drama to today’s policy statement. It will also be really interesting to see if the Fed’s dot plots even remotely reflect the recent reality, particularly with regarding to inflation.
Gold remains modestly defensive as the Fed’s 2-day FOMC meeting begins. The policy decision, economic projections and Janet Yellen’s presser are scheduled for tomorrow, beginning at 14:00ET.
U.S. PPI slowed to a 2.4% annualized pace in May, down from 2.5% y/y in April. This will add to the Fed’s worries about waning inflation pressures. Tomorrow before the Fed, we’ll get May CPI and retail sales. Expectations are unch and +0.1% respectively.
Despite generally soft economic data, the Fed is fully expected to hike rates by 25 bps. Focus tomorrow is going to be on the forward guidance and how it relates to the economic projections. Will the Fed continue on it’s tightening path, despite mounting evidence that the economy is slowing? Or does the preponderance of the data now warrant an additional degree of caution beyond June?
Be aware that the last several rate hikes have closely marked lows in gold. And each of those lows have been higher than the previous low.
Gold is slightly higher, buoyed by an easier dollar. The yellow metal is likely to be well contained early in the week as markets look ahead to Wednesday’s Fed decision.
Silver is defensive after being rejected from above the 17.47/65 resistance zone last week. Nearby support is well defined at 17.00/16.98.
Today’s economic calendar is very light with just the May Treasury budget. There will also be a $24 bln 3-year note auction and a $20 bln 10-year note reopen.