Category: Snapshot

Morning Snapshot: Gold Retreats Into Range Following NFP Miss

USAGOLD/Peter Grant/01-05-18

Gold is down modestly, having been unable to sustain a post jobs report rebound, but is still on track for a fourth consecutive weekly gain. Silver was able to attain a new 6-week high before retreating into the range.

U.S. nonfarm payrolls rose just 148k in December, below expectations of +190k and well below the whisper of +225k, versus a positive revised 252k in November. The unemployment rate steady at 4.1%, in line with expectations.

Hourly earnings rose 0.3%, which was in line with expectations as well, versus a negative revised 0.1% rise in November. The average workweek held steady at 34.5 hours.

The technical outlook for gold continues to be favorable after the yellow metal reached new 3½-month highs earlier in the week. More than 61.8% of the correction from the September high at 1357.50 to the December low at 1235.90 has now been retraced and gold is well supported above key moving averages. This all lends credence to the underlying uptrend.

On the fundamental side, geopolitical tensions, a weak dollar and growing concerns over inflation are all expected to continue to provide a tailwind. Buying on short term dips has been evident of late.

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Morning Snapshot: Gold Rebounds to Keep Pressure on Upside

USAGOLD/Peter Grant/01-04-18

Gold is up in early U.S. trading, boosted by renewed weakness in the dollar and ongoing geopolitical uncertainty. A breach of the 3½-month high set on Tuesday at 1321.47, would keep focus on last year’s high at 1357.50. Beyond that, the high from 2016 at 1375.15 attracts.

The greenback was unable to sustain yesterday’s corrective gains and is now back on the defensive with scope for a short-term challenge of the 4-year low in the dollar index at 91.13. Below that, there’s not much in the way of support until 84.75/10.

This morning’s ADP employment survey came in stronger than expected at +250k. “The tight labor market will get even tighter, raising the specter that it will overheat,” warned ADP. Where’s the wage pressure though?

This may indicate some upside risk for tomorrow’s December jobs report, where median expectations for nonfarm payrolls are at +190k. The jobless rate is expected to hold steady at 4.1% and hourly earnings are anticipated to rise 0.3%.

We’ll hear Fedspeak from St. Louis Fed dove Bullard.

It’s worth mentioning that the price of my coffee refill this morning was up 30% over yesterday! Is inflation finally taking hold?

Silver is up a dime, pressuring yesterday’s high at 17.24. The technical picture looks bullish. Resistance at 17.38/47 is the key to unlocking further gains.

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Morning Snapshot: Gold Corrects Modestly, But Uptrend Remains in Favor

USAGOLD/Peter Grant/01-03-18

Gold is down modestly this morning, weighed by a bit of corrective bounce in the beleaguered dollar. However, the solid gains into year-end 2017 and yesterday’s follow-through to fresh 3½-month highs continues to bode well for the dominant uptrend.

With more than 61.8% of the entire decline off the September high at 1357.50 retraced, that peak is looking increasingly attractive from a technical standpoint. The move back above the 100-day moving average last week gives further credence to the uptrend.

The U.S. economic calendar has December manufacturing ISM, November construction spending and December auto sales. The minutes of the December FOMC meeting will also be released. Friday is the December jobs report. Median expectations for nonfarm payrolls is +185k. The unemployment rate is expected to hold steady at 4.1%.

Silver remains well bid above $17. The white metal remains attractively undervalued, but the consolidation band at 17.38/47 likely needs to be cleared to put silver in catch-up mode. Such a move would shift focus to 18.00/18.21 initially, but potential would be toward $20 and beyond. See Mike’s Gold, Silver Predictions 2018.

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Morning Snapshot: Gold Extends Gains to 3-Month Highs

USAGOLD/Peter Grant/01-02-18

Gold is up in early New York trading, reaching levels last seen in mid-September. The yellow metal is being buoyed by heightened geopolitical tensions and a weak dollar.

Gold ended 2017 up more than 13%, driven largely by these two factors. U.S. political uncertainty was another driving force. The dollar index posted a 9.4% loss in 2017, its biggest annual decline since 2003.

Mounting political unrest in Iran has sparked additional haven interest in gold. The rise in oil prices to a 2½-year high above $60 is also stoking inflation concerns.

The technical picture improved significantly in the final week of 2017. The yellow metal is now trading comfortably above the 20-/50-/100- and 200-day moving average complex, which has returned considerable confidence to the underlying uptrend that dominated last year. This morning, the 61.8% retracement level of the decline off the early-September high at 1357.50 was exceeded.

Silver has eked out a 5-week high, returning to the consolidative range that dominated trading in October/November last year. Focus is now on resistance at 17.38/46.

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Morning Snapshot: Gold Consolidates Gains Notched Earlier in the Week

USAGOLD/Peter Grant/12-21-17

Gold is down slightly after having established a new 2-week high at 1268.29 overseas. A slightly firmer dollar and continued strength in stocks may be limiting the upside for the yellow metal, but political and geopolitical uncertainties continue to support.

This morning’s data has had little impact on the market. U.S. Q3 GDP was revised down slightly to 3.2%. The Philly Fed index for December jumped significantly. U.S. initial jobless claims jumped 20k to 245k last week, above expectations of 232k.

Later this morning, we’ll get November leading indicators. Median expectations for LEI is +0.4%.

Market action is likely to taper heading into the long Christmas weekend, but remember that tomorrow is the deadline for a budget deal (temporary or otherwise) to avert a government shutdown. Eleventh-hour negotiations last night reportedly did not go well. There are some risks heading into the weekend.

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Morning Snapshot: Gold Remains Firm as Tax Reform Moves Down the Homestretch

USAGOLD/Peter Grant/12-20-17

Gold is up modestly in early U.S. trading, establishing fresh 2-week highs. A softer dollar is helping to keep the yellow metal underpinned, despite continued buoyancy in stocks and yields as the tax bill moves down the homestretch.

Despite the impending legislative win on tax reform, the U.S. faces a government shutdown at the end of the week. There is little hope that Congress will pass a budget before midnight on Friday, so they will likely try to pass another stopgap funding measure that will kick the can into the new year.

With Democrats perhaps feeling a little stung from the tax reform process, they may be a less amicable on the budget negotiations. The resulting uncertainty may be contributing to recent gains in gold.

The U.S. calendar is light today with existing home sales and EIA crude inventory.

Silver is up at 2-week highs as well, trading comfortably back above $16 and near the 38.2% retracement level of the decline from the mid-November high. A rise above 16.50 would further ease pressure on the downside.

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Morning Snapshot: Gold Remains Firm Ahead of House Vote on Tax Bill

USAGOLD/Peter Grant/12-19-17

Gold is up slightly as markets awaits today’s anticipated House vote on tax reform legislation. In the mad scramble to get this piece of legislation to the President’s desk before the end of the week, the market seems to be ignoring the fact that the current short-term spending bill expires on December 22.

While neither party seems to have the stomach for a government shutdown, the window to get something done before the Christmas recess begins is small. Continually kicking the can with short-term continuing resolutions is no way to run a government, and yet this seems to be the only way to avert a government shutdown these days.

The inability of the dollar to build on last week’s bounce is helping to underpin gold. Meanwhile, stock market gains associated with an expectation of impending corporate tax cuts, have limited the upside for the yellow metal.

Rising geopolitical tensions are also seen as supportive to gold. The U.S. has blamed North Korea for a cyber attack earlier this year. Meanwhile, National security adviser H.R. McMaster said he doesn’t think the U.S., nor the world, can “tolerate” the risk of a nuclear armed DPKR.

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Morning Snapshot: Gold Firms As Congress Pushes to Pass Tax Deal, Faces Shutdown

USAGOLD/Peter Grant/12-18-17

Gold is up in early U.S. trading, buoyed by a weaker dollar. The rise in the yellow metal comes despite continued gains in shares and firmer yields, as cyclical forces seem to have taken hold.

The stock market is eagerly anticipating final passage of the GOP tax bill early this week, despite swirling doubts about the positive economic impact of the legislation and a certainty that the debt level is going to rise. Congress also needs to pass a budget agreement and address the debt ceiling this week, or face a partial government shutdown.

While the tax bill can get passed without any support from Democrats, the budget/debt ceiling agreement is going to require at least a little bipartisanship. The more likely scenario is that they kick-the-can yet again with another short-term deal.

Silver is back above $16, but remains comparatively soft. However, there is a growing recognition that silver is quite undervalued relative to gold. Kitco reported late last week that “both TD Securities and Bank of Montreal came out and said that they see silver prices pushing to $20 an ounce next year.”

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Morning Snapshot: Gold Recovery Continues

USAGOLD/Peter Grant/12-15-17

Gold is up in early U.S. trading, buoyed by a softer dollar and appears poised to record its first weekly gain in the last four. This is a good initial indication that the pattern that has emerged in recent years, where gold bottoms late in the year and rallies into the new year, is set to repeat.

Fresh doubts about whether the reconciled tax bill has the votes to clear Congress is stoking political uncertainty. While the Fed now sees GDP rising to 2.5% in 2018, they see it tapering again to 2.0% by 2020. The long range forecast remains steady at 1.8%, raising doubts that the tax bill will “pay for itself.” as the backers claim.

The GOP is trying to get the legislation passed before the new Democrat Senator from Alabama can get seated, which would further narrow the already razor thin advantage Republicans holds in the upper chamber. If the tax measure fails to get to the President’s desk by year-end, stocks would likely reverse, which would push gold back toward $1300.

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Morning Snapshot: Gold Eases After BoE and ECB Hold Steady on Policy

USAGOLD/Peter Grant/12-14-17

Gold is down slightly in early U.S. trading. The yellow metal is mostly maintaining yesterday’s post-FOMC gains, but the corresponding retreat in the dollar seems to have stalled following this morning’s round of generally favorable economic data.

Initial jobless claims for last week were lower than expected. November retail sales were in line, but ex-auto beat expectations. Import and export prices were hotter than anticipated as well.

While the data seem to support Fed guidance for another 3 or 4 rate hikes in 2018, periods of data inspired optimism have tended to be fleeting. As noted yesterday, there is still cause for concern on the wage and inflation fronts.

Both the BoE and ECB held steady on policy today, and this divergence with the Fed is likely to provide some underpinning for the dollar. That in turn presents a bit of a headwind for gold.

However, seasonal pressures that have been evident in recent years, provide a potentially countervailing tailwind. If the pattern repeats of course.

Silver was able to regain $16 after the Fed announcement yesterday, but those gains have proven unsustainable thus far. Silver is back below $16 and most of the pullback in the gold/silver ratio from yesterday has already been retraced. Silver remains very undervalued, presenting an intriguing value proposition.

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Morning Snapshot: Gold Stabilizes Ahead of Fed Decision

USAGOLD/Peter Grant/12-13-17

Gold is up slightly as the market eagerly awaits the Fed policy decision later today. The yellow metal remains generally on defense, having set a 5-month low yesterday at 1235.90. We’ll see if the December FOMC meeting closely corresponds with a market low for a third consecutive year.

The Fed is widely expected to announce a 25 bps rate hike at 2:00ET today. Focus will be on the forward guidance within the statement and dot-plots, as well as what is likely to be Janet Yellen’s final presser as chair.

Headline CPI met expectations at +0.4% in November, pushing the annualized pace of consumer inflation up to 2.2%. However, core inflation rose just 0.1% m/m and the annualized pace slowed to 1.7%.

There doesn’t seem to be cause for much optimism on the wage or inflation front. I mean, you can only cry “transitory” for so long before you need to acknowledge something structural might be occurring. One really only need look at Japan’s experience over the last 30-years to perhaps get an inkling of what’s in store. Certainly tighter monetary policy is not going to help the cause.

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Morning Snapshot: Gold Slides to 5-Month Low As FOMC Meets

USAGOLD/Peter Grant/12-12-17

Gold is down slightly in early U.S. trading, having eked out a new 5-month low at 1238.90. Gold continues to be pressured by a stronger dollar as the Fed begins their 2-day FOMC meeting.

A 25 bps rate hike is fully expected when the Fed announces policy tomorrow. Dollar and yield strength seems to reflect growing expectations of more hawkish guidance for 2018.

Headline PPI rose 0.4% in November, pushing the annualized rate to producer inflation to a 6-year high of 3.1%. However, core PPI remained steady at +2.4% y/y, despite a higher than expected m/m rise of +0.3%.

November CPI comes out tomorrow in advance of the Fed’s announcement. Headline CPI is expected to rise to a 2.2% annualized pace, while core CPI is anticipated to hold steady at +1.8%.

Along with the Fed decision tomorrow, we’ll get the central bank’s economic forecasts and Chair Yellen will hold a press conference. We’ll see how optimistic the Fed is about wage and price growth in the year ahead.

Silver remains under pressure as well, also edging to new 5-month lows with the breach of last week’s low at 15.62. Silver is pretty oversold at this point, but $16 must be regained to ease pressure on the downside.

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Morning Snapshot: Gold Trading Near Unchanged from Friday’s Close

USAGOLD/Peter Grant/12-11-17

Gold is trading near unchanged in early New York trading after overseas uptick faded. The yellow metal remains defensive near the 4-month plus lows that were set last week as markets await the Fed decision on Wednesday this week, with a softer dollar offering some support.

The Fed is widely expected to hike interest rates by 25 bps, despite persistently soft earnings and inflation. Fed funds futures continue to put the probability of a hike in excess of 90%.

Today’s calendar is light with JOLTS job openings for October and 3- and 10-year auctions. November PPI and CPI come out on Tuesday and Wednesday respectively. Headline numbers are expected to edge higher, while core readings are likely to remain sluggish.

Silver is down modestly and remains on the ropes below $16 after posting a third consecutive weekly decline. With the gold/silver ratio elevated above 79, silver is arguably quite undervalued. A move back above $16 would ease short-term pressure on the downside.

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Morning Snapshot: Gold Up Modestly Post-NFP

USAGOLD/Peter Grant/12-08-17

Gold remains defensive at the low-end of yesterday’s range. The yellow metal continues to be weighed by a firmer dollar and heightened risk appetite.

The greenback has risen more than 1% this week on expectations that the Fed will come off “pause” next week and hike the Fed funds rate by 25 bps. The current ‘risk-on’ environment is keeping focus on stocks and bitcoin.

Today’s better than expected nonfarm payrolls number lends credence to the anticipated rate hike. However, there continues to be reason for concern in the earnings data.

Nonfarm payrolls rose 228k in November, above expectations of +198k, versus a negative revised +244k in October (was +261k). The unemployment rate steady at 4.1%, as expected.

Hourly earnings rose 0.2%, below expectations of +0.3%, versus a negative revised -0.1% (was unch) in October. That does not bode well for an imminent end to this allegedly “transitory” period of low inflation.

Congress passed a stopgap spending measure late yesterday, which will keep the government funded for an additional two-weeks until December 22. A kick of the can, albeit a short one.

Silver remains defensive below $16, but is trading slightly higher this morning. The gold/silver ratio reached a high of 79.53 yesterday, suggesting that silver is very undervalued relative to gold. A rebound above $16 is needed to ease short-term pressure on the downside.

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Morning Snapshot: Gold Drops to 4-Month Lows

USAGOLD/Peter Grant/12-07-17

Gold is down in early U.S. trading, having definitively breached the low end of the range at 1260.10 overseas. That puts the yellow metal at a 4-month low amid a firmer dollar and ongoing optimism that a tax bill will get to the President’s desk before year-end.

Tomorrow is the deadline for at least a temporary spending measure to avert a government shut down. Congressional leaders are slated to meet with President Trump at the White House today in a last ditch effort to kick this can once again.

Then the Fed will make their final policy decision of the year next week. There is plenty of evidence to suggest they should remain on pause, but the market remains convinced that a 25 bps rate hike is in the cards.

U.S. initial jobless claims fell 2k to 236k in the week ended 02-Dec, below expectations of 240k. Later this morning we’ll get October Consumer Credit and M2 for last week.

Tomorrow is jobs Friday. Nonfarm payrolls are expected to rise by 198k. The jobless rate is expected to hold steady at 4.1%.

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Morning Snapshot: Gold Weaker At The Low End of Range

USAGOLD/Peter Grant/12-05-17

Gold is down within the well defined range, weighed by intraday dollar gains and firm stocks. The low end of the range at 1260.10 is protected by an intervening tier of support at 1263.00.

Risk appetite remains elevated as tax reform makes its way through the process. Additionally, it looks like Congress is going to kick the can yet again on funding for the government and the debt ceiling, averting a partial government shutdown at the end of the week. “There’s not going to be a government shutdown,” said Senate Majority Leader Mitch McConnell.

There still some political wrangling to be done, both on the funding measure and on the tax bill, and there’s not a heck of a lot of time. However, markets seem optimistic that both are going to get done.

The U.S. trade deficit widened to -$48.7 bln in October, outside expectations of -$46.6 bln. What’s interesting is that the deficit is nearly as wide as it’s been in 5-years, despite the fact that the dollar has been under pressure for most of the year.

While the greenback was on the rise from September through early-November, at the end of October the dollar index was down 7.3% YTD. If President Trump really wants to improve the trade balance, it seems a much weaker dollar is going to be needed.

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Morning Snapshot: Gold Defensive Within Range as Stocks Surge

USAGOLD/Peter Grant/12-04-17

Gold is down in early U.S. trading to start the week, weighed once again by heightened risk appetite in the wake of the Senate’s passage of tax reform legislation over the weekend. Stock futures are up sharply this morning with the centerpiece of the aforementioned bill being a significant cut to corporate taxes.

U.S. yields jumped, dragging the dollar higher, but the greenback has been unable to sustain gains thus far. Perhaps because the tax bill is expected by many to significantly increase deficits and the debt.

The House is expected to vote today to establish a conference committee, where the House and Senate versions will be reconciled. This is anticipated to be a heavy lift in the short period before the Christmas recess.

The U.S. calendar is light today with October factory orders/inventories. The big event of the week comes on Friday with the November jobs report. Median expectations for nonfarm payrolls are +198k. The unemployment rate is expected to hold steady at 4.1%.

The low end of the well established range in gold remains protected at 1260.10. Dips into the low end of that range have been seen as buying opportunities for more than a month.

Offering support to the yellow metal are heightened geopolitical tensions and ongoing political uncertainty here in the U.S. Softness in the dollar is also providing some support.

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Morning Snapshot: Gold Remains Defensive Within Range

USAGOLD/Peter Grant/12-01-17

Gold is down slightly, but still well contained within the range that has dominated for the past 6-weeks. Risk appetite has been on the rise of late as GOP tax reform legislation makes its way through the process.

Stocks have been setting record highs in anticipation of a significant corporate tax cut that will increase profit margins. The dollar has rebounded somewhat as well, keeping the yellow metal under pressure.

Today’s U.S. calendar has manufacturing ISM and PMI, construction spending and auto sales. FedSpeak is due from Bullard, Kaplan, Harker and Quarles.

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Morning Snapshot: Gold Remains Defensive Within Range

USAGOLD/Peter Grant/11-30-17

Gold is down, maintaining a defensive tone within the well defined range. The yellow metal is being weighed by heightened risk appetite, driven by tax cut optimism, which keeps focus on frothy stocks.

U.S. personal income rose 0.4% in October, above expectations of +0.3%. PCE also bested expectations, although moderated considerable from the negative revised +0.9% in September.

Core PCE inflation — the Fed’s preferred measure of inflation — rose to 1.4%, but remains well below the 2.0% target. Inflation has been trending lower this year, which prompted the central bank to pause the tightening cycle in September.

So, does this uptick signal a reversal of that trend, or merely a brief reprieve? That’s a question the FOMC will have to wrestle with in a couple weeks.

The dollar index was unable to sustain a probe above the 100-day moving average in earlier trading, keeping focus on the downside. Continued weakness in the dollar should help protect the low end of the range in gold as well.

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Morning Snapshot: Gold Retreats Into Range After Q3 GDP Revision

USAGOLD/Peter Grant/11-29-17

Gold is down in early U.S. trading after Q3 GDP was revised higher. The dollar rose, pushing the yellow metal back into the recent range as stronger growth provides further justification for a rate hike in December.

U.S. Q3 GDP was revised up to 3.3%, in line with expectations, versus 3.0% previously and 3.1% in Q2. However, it is widely expected that growth is slowing in Q4. We saw some downward revisions yesterday on the surge in the trade deficits.

While the uptick in growth is encouraging, Janet Yellen will reiterate today before the JEC that core inflation “has remained surprisingly subdued.” According to her prepared testimony, released earlier this morning, she will go on to say “the recent lower readings on inflation likely reflect transitory factors.”

It seems like we’ve been hearing that for an awfully long time. We’ll get the latest inflation reading tomorrow with the release of October PCE data tomorrow. If inflation remained steady or increased in October, the market will remain convinced that the hike is on. If inflation slowed, rate hike expectations will be tempered.

Later this morning we get the October Pending Home Sales Index and EIA crude stocks for last week.

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Morning Snapshot: Gold Remains Firm Near $1300

USAGOLD/Peter Grant/11-28-17

Gold is up slightly in early U.S. trading. The yellow metal is holding up pretty well in the wake of yesterday’s push to 6-week highs, just shy of $1300. A firmer dollar and modest stock market gains are perhaps limiting the upside at this point.

U.S. advance trade gap widened to -$68.3 bln in Oct, outside expectations of -$65.5 bln, vs -64.1 bln in Sep. Home prices continue to rise with the FHFA index gaining 0.3% and the Case-Shiller 20-city index gaining 0.4% in September.

Later this morning we’ll see November consumer confidence and the Richmond Fed index. Fed chair nominee Powell appears before the Senate and we’ll hear FedSpeak from Dudley and Harker.

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Morning Snapshot: Gold Sets 5-Week Highs, Buoyed by Weak Dollar

USAGOLD/Peter Grant/11-27-17

Gold is up to start the post holiday week, setting fresh 5-week highs above 1297.10. The yellow metal is getting a lift from continued dollar weakness in the wake of the more dovish than expected Fed minutes from last week.

While some doubts have been raised about the likelihood of a December rate hike, Fed funds futures continue to show a probability in excess of 90%. Later this week we’ll see the Fed’s preferred gauge of inflation for October, which has the potential to temper rate hike expectations if it remains weak.

Today’s economic calendar is light with October new home sales and the November Dallas Fed index. After the close we’ll hear Fedspeak from doves Kashkari and Dudley. Fed chair nominee Powell will testify before the Senate Banking Committee on Tuesday.

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Morning Snapshot: Gold Firms Within the Range

USAGOLD/Peter Grant/11-22-17

Gold is up in early U.S. trading, lifted by a softer dollar. More than half of Monday’s sharp intraday sell-off has now been retraced, leaving the low end of the recent range well protected.

U.S. initial jobless claims fell 13k to 239k in the week ended 18-Nov, just below expectations of 240k. However, October durable goods orders really missed the mark, tumbling 1.2% on expectations of a rise of 0.5%. Septembers solid gain was trimmed to +2.0%, from +2.2% previously.

Core capital goods orders fell 0.5%. New orders plunged 5.1%. Nondefense aircraft orders -18.6%. Defense aircraft orders -11.3%.

It would seem the boost derived from recent aircraft orders and the hurricanes has come to an end. Look for some downward adjustments to Q4 GDP expectations. Rate hike expectations may get tempered as well, particularly if next week’s PCE data continues to reflect weak inflation.

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Morning Snapshot: Gold Defensive Back in Lower Half of Range

USAGOLD/Peter Grant/11-21-17

Gold is down this morning, back in the lower half of the range after coming under selling pressure during the U.S. session yesterday. The bottom of the range is well defined at 1263.00/1260.10 and remains protected at this point.

The Chicago Fed national activity index for October came in better than expected. Later this morning we’ll get October existing home sales, which are expected to edge higher to a 5.410M pace.

After the close, Fed chair Yellen will speak at NYU along with former BoE Governor Mervy King. The minutes from the November FOMC meeting will be released tomorrow. The latter will perhaps provide a better window into the Fed’s thinking going into year-end. Is soft inflation still a concern? Is the Fed angling for another rate hike, regardless of the inflation outlook?

Thursday is of course the Thanksgiving holiday. Markets are open on Friday, but trading is historically very thin.

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Morning Snapshot: Gold Easier Within Range

USAGOLD/Peter Grant/11-20-17

Gold is down modestly to start the holiday shortened week, but the tone within the range remains generally favorable after solid gains on Friday. Focus remains on the next tier of resistance at 1306.04/1308.80 (16-Oct high and 50% retracement of the entire move from 1357.50 to 1260.10).

Political and geopolitical tensions, along with recent weakness in stocks and the dollar, are all helping to underpin the yellow metal within the well defined range.

Negotiations in Germany to form a coalition government collapsed last night after the Free Democratic Party (FDP) walked out. The reaction in Europe has been muted thus far, with the euro recovering from initial losses. However, the risks may be considerable.

The U.S. economic calendar is light today with just October leading indicators. Expectations are for a 0.5% rise, after a 0.2% decline in September.

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Morning Snapshot: Gold Edges Higher Within the Range

USAGOLD/Peter Grant/11-17-17

Gold is up in early U.S. trade, underpinned by escalating political uncertainty and geopolitical tensions. The dollar and stocks remain somewhat defensive as well, providing additional support for the yellow metal.

The Wall Street Journal reported yesterday that more than a dozen Trump campaign officials were issued a subpoena by Special Counsel Robert Mueller last month, requesting documents and emails “that reference a set of Russia-related keywords.” This comes at a time when the Trump administration is trying to shepherd tax reform legislation through Congress, deemed critical to keeping their broader economic agenda on track.

North Korea has reportedly rejected Chinese overtures to give-up their nuclear program. “[T]here is no way other than standing against the repressive U.S. imperialists only with a nuclear deterrent of justice,” declared the state-run newspaper Rodong Sinmun.

U.S. housing starts for October came in much better than expected, surging 13.7% to a 1.290M pace. That’s the extent of the U.S. data today.

It’s worth mentioning that Canadian CPI slowed in October to 1.4% y/y, versus 1.6% in September. Median core CPI slowed to 1.7% y/y, down from 1.8% in September. These inflation data come in the month after the BoC surprised with a 25 bps rate hike in September.

A breach of the high from earlier in the week at 1289.50 is needed to clear the way for renewed probes above $1300. Key resistance is marked by the mid-October high at 1306.04, which is the trigger for a retest of the 1357.30 high for the year.

Meanwhile, the low end of the range is well defined at 1263.00/1260.10. Intervening barriers are at 1269.60 and 1264.70.

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Morning Snapshot: Gold Little Changed After Mixed Data, Tax Reform Concerns

USAGOLD/Peter Grant/11-16-17

Gold is up slightly in early New York trading, underpinned by recent softness in the dollar and mounting doubts about the prospects for tax reform legislation. Geopolitical tensions remain elevated as well, providing additional support to the yellow metal.

Senator Ron Johnson of Wisconsin has vowed not to vote for the Senate version of tax reform. “If they can pass it without me, let them,” said Johnson. There are reportedly some other potential defectors as well.

Today’s U.S. data were kind of a mixed bag. Industrial production for October was better than expected. The Philly Fed index sunk more than expected. Initial jobless claims jumped by 10k. Import and export prices were weaker than expected, dealing perhaps another blow to hopes that inflation is picking up.

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Morning Snapshot: Gold Hits 4-Week Highs, Remains Firm After Today’s Data

USAGOLD/Peter Grant/11-15-17

Gold is up, reaching new 4-week highs above 1288.70. The yellow metal was being buoyed by a weaker dollar and risk aversion going into this morning’s data, and is sustaining those gains post-data.

Geopolitical tensions remain high, with an apparent coup in Zimbabwe adding to the risk-off mindset.

U.S. CPI for October came in pretty much in line with expectations. Headline CPI slowed to a 2.0% annual pace, down from 2.1% in September. Core CPI on the other hand accelerated to 1.8% y/y, versus 1.7% in September. It was the first uptick since January.

That may keep December rate hike expectations elevated, but one uptick in 9-months does not a trend make. I don’t think it will be enough to sway the more dovish members of the Fed that are leaning toward keeping policy on pause through year-end.

U.S. retail sales rose 0.2% in October, above expectations of +0.1%. However, ex-auto rose just 0.1% on expectations of +0.3%. September was revised higher in both instances, but it appears that hurricane distortions are fading.

While gold remains confined to the range that has dominated for the last month, upticks in more recent weeks bode well for renewed tests above $1300. A breach of resistance at 1306.04 (16-Oct high) is still needed to return attention to the high for the year at 1357.50 (08-Sep high).

The bottom of the range at 1263.00/1260.10. This level was reinforced by unsustained tests of the downside earlier in the week. Yesterday’s low at 1269.60 now provides a good intervening barrier.

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Morning Snapshot: Gold Pressured Within Range, Despite Weaker Dollar/Stocks

USAGOLD/Peter Grant/11-14-17

Gold is down in early New York trading, still well within the recent range. However, both the dollar and stocks are also weaker this morning, which should limit the downside for the yellow metal.

U.S. PPI came in hotter than expected in October. Both headline and core rose 0.4%, on expectations of +0.1% and +0.2% respectively. If CPI data beat expectations tomorrow, it will go a long way toward validating the exceedingly high expectations for a December rate hike.

However, if inflation really is picking up, that ultimately will be good for gold. The yellow metal is the classic hedge against inflation.

The dollar index is trading at a three week low on euro strength, after German GDP came in better than expected. While the German economy is humming along, it’s worth noting that German investors are hedging their bets by buying a lot of gold. Smart.

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Morning Snapshot: Gold Edges Up Within Range

USAGOLD/Peter Grant/11-13-17

Gold is up modestly, attempting to retrace Friday’s sharp intraday sell-off. Just about half of those losses have been recovered, but the yellow metal remains well contained within the recent range.

A softer dollar and weakness in stocks are offering support to gold. Focus remains on political uncertainty surrounding the House and Senate versions of tax reform legislation. There are concerns about the reconciliation process; what might ultimately reach the President’s desk and when that might happen.

Not much on the economic calendar today, but we have important inflation data coming out this week. October PPI is out tomorrow, with expectations calling for further slowing to 2.3% y/y. CPI is out on Wednesday. A small m/m increase is expected, which will likely result in a downtick to the annualized rate. Core CPI is expected to hold steady at 1.7% y/y.

The market continues to see a Fed rates hike next month as a given, despite persistently soft inflation. However, those expectations may be tempered if further weakness is evident in the October data. That would likely put the dollar under additional pressure, offering further support to gold.

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Posted in Gold News, Gold Price, Gold Views, Snapshot |