Gold remains well bid, near the 11-month high established yesterday at 1344.33. Geopolitical and political tensions continue to dominant the headlines, driving haven flows.
U.S. yields have reached levels not seen since the U.S. election back in November. This is obviously weighing on the dollar and providing an additional tailwind for gold.
The North Korean nuclear test over the weekend reportedly has enraged Chinese leaders. Hawkish rhetoric is on the rise in Beijing, calling for heightened sanctions and potentially cutting off oil supplies.
Additionally, the Chinese military staged a demonstration of its ability to shoot down missiles near the North Korean border. According to the South China Morning Post, the test was intended as a warning to Pyongyang.
Gold remains well bid as U.S. investors return from the long holiday weekend. The yellow metal posted solid gains yesterday on escalating tensions with North Korea.
North Korea conducted a nuclear test on Sunday. Speculation is that it was a hydrogen bond in the range of hundreds of kilotons, far larger than all previous tests. Obviously the U.S. and its allies have taken notice and the saber rattling has ramped up considerably.
North Korea is reportedly moving a missile, which has further raised concerns. The South Korean defense minister has said it’s worth considering redeploying U.S. tactical nuclear weapons to counter recent aggressive moves by the DPRK.
Congress returns to work today after the month-long summer recess. They will begin trying to hammer out a budget and a resolution to the the debt ceiling as the country hurdles toward a possible government shutdown and/or default. A number of other contentious pieces of legislation are being forwarded in the weeks ahead, which may further muddy the waters.
The heightened geopolitical and political tensions will continue to keep gold underpinned. Last year’s high at 1375.15 is the next significant level of resistance.
Gold pushed to new highs for the year above 1326.00 in the wake of this morning’s nonfarm payrolls miss. The yellow metal subsequently retreated into the range, perhaps on profit taking ahead of the long holiday weekend, but dips are likely to be seen as buying opportunities.
U.S. nonfarm payrolls rose 156k in August, below expectations of +183k, versus a negative revised 189k rise in July (was +209k). The unemployment rate ticked up to 4.4%. Expectations were for steady at 4.3%.
Hourly earnings rose just 0.1%, below expectations of +0.2%, versus a negative revised +0.1% in July (was +0.3%). The average workweek ticked down to 34.4 hours, on expectations of 34.5 hours.
The weakness of these data further erode the likelihood of another rate hike this year. It may also give the Fed pause when it comes to beginning the balance sheet unwind, signaled to start as early as this month.
The dollar initially retreated, along with U.S. yields, providing a boost for gold. The dimmed prospects for tighter monetary policy are underpinning stocks. For that market, good news is good news and bad news is good news . . . until it isn’t . . .
Gold continues to consolidate near the high end of this year’s range, shrugging-off further gains in the dollar. Clearly, political and geopolitical risks continue to underpin the yellow metal.
U.S., South Korean and Japanese warplanes staged a live-fire bombing exercise on the Korean Peninsula yesterday. It was a direct response to North Korea’s missile launch that flew over Japan earlier this week. The sabers continue to be rattled.
President Trump attempted to reinvigorate the push for tax cuts and tax reform before year-end. Emphasis seems to be on a corporate tax cut, but apparently the President is going to leave the details to Congress.
Congress is going to have a full slate when they return next week from the month-long summer recess. And everything is going to be hotly contended, with default and a government shutdown hanging in the balance.
Gold dipped briefly on this morning’s Q2 GDP beat. However, downticks have been limited thus far amid persistent political and geopolitical risks.
U.S. Q2 GDP was revised up to 3.0%, above expectations of 2.8%, versus a 2.6% preliminary read and 1.2% in Q1. This may lead to a rise in December rate hike expectations, but September remains off the table.
President Trump tweeted this morning that “Talking is not the answer!” when it comes to North Korea. It’s unclear at this point what the President thinks might work, but this might easily be interpreted as a threat of military action.
The dollar has rebounded after setting 32-month lows yesterday, which is weighing on gold. However, the correction in the greenback will likely be sold as a selling opportunity. If the dollar remains in a downtrend, it will continue to provide a tailwind for gold.
Gold has extended to the upside in the wake of yesterday’s convincing breach of the $1300 level. The yellow metal has gotten an additional boost from heightened geopolitical tensions after North Korea fired a ballistic missile that flew over Japan.
President Trump has warned that “all options are on the table.” Japan’s PM called this significant escalation of tensions “a most grave threat.” This has created a risk-off environment, pushing stocks lower and boosting the yen, Swiss franc, Treasuries and of course gold.
The dollar index has fallen through key support at 91.92, reaching levels not seen since January 2015. The implications for the greenback are quite bearish, which in turn bodes well for gold.
Gold jumped in overseas trading to pressure the important 1300.00 level once again. Mew highs for the year above 1300.98 would shift attention to the 1375.15 high from last year.
The yellow metal is being driven by a weak dollar, after Janet Yellen disappointed policy hawks on Friday by not addressing that topic specifically. That leaves the dovishness of the July FOMC minutes as the last official word on policy from the Fed.
Ms. Yellen also warned about excessive optimism and leverage in the market. Mario Draghi piled on with his own warnings about the threat of protectionism derailing the global economy.
With political and geopolitical risks mounting, look for safe-haven demand for gold to persist. Major support in the dollar index is close at hand at 91.92. If this level gives way, there is very little additional support for quite a ways. At that point, gold could really run.
Gold is narrowly confined awaiting news out of Jackson Hole. The bias remains to the upside in light of a myriad of political and geopolitical risks that are presently outweighing any economic optimism.
The market seems to want some indication from Yellen as to whether the Fed will force one more rate hike this year regardless of the current risks. The alternative is that the Fed decides the risks are too great, the likelihood of fiscal stimulus has evaporated and hence the tightening cycle is over.
Axios reported yesterday that a top Republican source put the chance of a government shutdown as high as 75%: “The peculiar part is that almost everyone I talk to on the Hill agrees that it is more likely than not.”
U.S. durable goods orders tumbled 6.8% in July, below expectations of -5.7%, versus negative revised +6.4% in June. Aside from the Janet Yellen and Mario Draghi speeches, that’s it on the calendar today.
Yellen’s speech begins at 10:00ET, followed by Draghi at 3:00ET.
Gold is trading slightly lower within the recent range as markets await speeches from Fed chair Yellen and ECB President Mario Draghi. With political and geopolitical uncertainties underpinning the yellow metal, some clarity on monetary policy out of Jackson Hole could be the impetus for the next move.
North Korea once again condemned the ongoing joint U.S. and South Korean military exercises and then revealed plans for two new ballistic missile systems. According to the BBC, “Hwasong-13 appears to be a three-stage ICBM, while the chart showing Pukguksong-3, although largely obscured by officials, is an Submarine Launched Ballistic Missile.”
U.S. initial jobless claims rose 2k to 234k in the week ended 19-Aug, below expectations of 238k. Later this morning we’ll see existing home sales for July and M2 for last week.
Tomorrow is the more important day, with durable goods orders and of course the speeches at Jackson Hole.
Gold has rebounded, but remains narrowly confined within the range established last week. The yellow metal continues to be supported by political and geopolitical uncertainty and the attendant soft dollar.
Political uncertainty intensified after President Trump threatened to shut down the government in order to secure funding for the pledged border wall.
“If we have to close down our government, we’re building that wall.” — President Donald Trump
This morning we’ll see Markit PMIs, new home sales for July and EIA crude stocks for last week. We’ll also hear FedSpeak from Dallas Fed President Kaplan.
The market is unlikely to move significantly in either direction until after the speeches by Janet Yellen and Mario Draghi on Friday. While both are expected to stick to their respective scripts, Jackson Hole has been a venue where policy shifts have been floated in the past.
Gold continues to trade within the recent range below $1300. Gold is oscillating as risk appetite ebbs and flows amid varied political and geopolitical risks. However, those risks should keep gold underpinned.
President Trump’s speech last night suggests the U.S. is in Afghanistan to stay. He also ratcheted-up pressure on Pakistan, calling them out for providing “safe havens for terrorist organizations.” Mr. Trump then called for a strategic counter-terror partnership with India, Pakistan’s primary regional rival.
The U.S. calendar has the FHFA home price index for June as well as the August Richmond Fed index. Later this week we’ll get July durable goods orders and big speeches in Jackson Hole from Fed Chair Yellen (financial stability) and ECB President Draghi (fostering a dynamic global economy).
Yesterday Treasury Secretary Mnuchin went to Ft. Knox to check on our gold. I’m happy that his assessment is that the “gold is safe.”
However, an audit of the reserve asset that makes up 74.5% of America’s total reserves still seems appropriate. Is the gold really safe if there are multiple claims on those ounces?
Gold firmed overseas as North Korea ramped-up the saber rattling in reaction to joint military exercises between the U.S. and South Korea commenced today. While the yellow metal was not able to sustain the initial probe above $1300 on Friday, further tests may be in the offing.
“The Korean People’s Army is keeping a high alert, fully ready to contain the enemies. It will take resolute steps the moment even a slight sign of the preventive war is spotted,” threatened the North Korean state-run newspaper Rodong Sinmun. According to CNN, they went on to warn that “neither Guam, Hawaii nor the US mainland can ‘dodge the merciless strike.'”
The economic calendar is quiet today. The Chicago Fed National Activity index fell to -0.01 in July, versus positive revised 0.16 in June. The eclipse later today will likely disrupt markets and commerce as everyone will be outside looking to the sky with cardboard sunglasses.
Later this week, focus will shift to the KC Fed’s Jackson Hole Symposium. Both Mario Draghi and Janet Yellen speak on Friday.
Gold extended to the upside driven by risk aversion. Yesterday’s terror attack in Spain further sapped risk appetite that has been weighed recently by heightened geopolitical, political and economic risks.
The yellow metal eked out new highs for the year above 1296.06. A convincing push above $1300 would shift focus to last summer’s peak at 1375.15.
The dollar has eased as well, offering additional support for gold. The corrective uptick in the greenback over the past two-weeks never amounted to much. Critical support defined by the 91.92 low from May of 2016 is considered vulnerable.
Canada continues to struggle with low inflation as well. July CPI was unchanged. While annualized inflation ticked up to 1.2%, this is well below the BoC target.
The U.S. calendar is light with just preliminary Michigan consumer sentiment for August. We’ll also hear FedSpeak from Dallas Fed President Robert Kaplan.
Gold remains well bid in the wake of yesterday’s more dovish than expected FOMC minutes, even as the dollar has recovered. Last week’s high at 1292.05 was pressured, but has capped the upside thus far.
Heightened concern about the lack of inflation evident in the FOMC minutes was interpreted as being dovish. However, changes in Fed funds futures have been limited thus far. A September rate hike remains off the table, while December is still a toss-up.
Initial jobless claims fell 12k last week to 232k. The Philly Fed Index fell to 18.9, which was better than expectations of 18.0. Later this morning, we’ll get July industrial production, which is expected to rise 0.3%.
Gold is narrowly confined at the low end of yesterday’s range. Diminished geopolitical risks are putting modest pressure on the yellow metal, inciting investors to move back into ricks assets. However, a host of other risks underpin and nobody really believes the North Korean situation is anywhere close to being resolved.
U.S. housing starts tumbled 4.8% in July to a 1.155M pace, below expectations of 1.220M, versus a negative revised 1.213M in June. Minutes of the July FOMC meeting come out later today and markets will be looking for any clues about the likelihood of another rate hike this year. It’s pretty much baked into the cake that won’t happen in September, but December remains a toss-up.
The U.S. Air Force conducted training exercises with Japanese Self Defense Force pilots. “These training flights with Japan demonstrate the solidarity and resolve we share with our allies to preserve peace and security in the Indo-Asia-Pacific,” the U.S. Air Force said.
A large U.S./South Korea military exercise begins later in the month. There are plenty of opportunities for this situation to spin back out of control.
Gold came under additional corrective pressure on diminished geopolitical risks and following better than expected retail sales data from July. However, price action remains confined to last week’s range.
North Korea walked back its threat to launch missiles on the U.S. territory of Guam. Although North Korea is prepared for such an attack, they said they would watch what “the foolish Yankees” do before making a decision.
U.S. retail sales rose 0.6% in in July, above expectations of +0.4%, versus a positive revised +0.3% in June. Retail sales excluding autos rose 0.5%, on expectations of +0.3%. The Empire State Index also bested expectations. U.S. export prices were hotter than expected, while import prices rose slightly, inline with expectations.
Gold eased in overseas trading to begin the week as U.S. and South Korean officials played-down the possibly of war. The retreat from in front of 1296.06/1300.00 leaves the upside protected for the time being, but thos morning’s dip already seems to be attracting buying interest.
“I am certain the United States will respond to the current situation calmly and responsibly in a stance that is equal to ours,” said South Korean President Moon Jae-in. U.S. National Security Adviser H.R. McMaster said, “I think we’re not closer to war than a week ago, but we are closer to war than we were a decade ago.”
This talk is much more tempered than some of the fiery rhetoric from both sides heard last week. However, things could escalate again if North Korea conducts another missile test, as some are anticipating.
The U.S. calendar is quiet today. July retail sales along with import and export prices are out tomorrow. Later in the week we’ll see industrial production and LEI.
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.
Gold extended to the upside, bringing the high for the year at 1296.06 from June within striking distance. Silver is trading with a 17 handle for the first time in 8-weeks.
The precious metals continue to be buoyed by heightened geopolitical tensions between the U.S. and North Korea. Serious talk about a potential nuclear exchange is understandably unnerving, which is inciting investors to move into safe-havens. And the safest of all safe-havens is gold.
North Korea’s state-run news agency reiterated the threat of a nuclear strike on Guam this morning. KCNA reported that the military is “seriously examining the plan for an enveloping strike at Guam through simultaneous fire of four Hwasong-12 intermediate-range strategic ballistic rockets in order to interdict the enemy forces on major military bases on Guam and to signal a crucial warning to the U.S.”
July PPI came in at -0.1%, below expectations of +0.1%; slowing to a 1.9% annualized pace. Core PPI was -0.1%, below expectations of +0.2%, bringing the annualized rate down to 1.8%.
This additional evidence that price pressures are on the wane will further erode rate hike expectations for the remainder of the year. It may also give the Fed pause when it comes to beginning balance sheet normalization.
CPI is out tomorrow. Headline and core CPI are both expected to come in at +0.2%. Misses will be just another nail in the tightening cycle’s coffin.
Gold jumped to new 8-week as geopolitical tensions between the U.S. and DPRK ratchet higher. Flight to safety positioning not only lifted gold, but U.S. Treasuries as well.
After “intelligence sources” told the Washington Post on Tuesday that North Korea had likely miniaturized a nuclear devise that could be fitted to a missile, President Trump responded by saying, “They will be met with fire and fury like the world has never seen.”
This morning, North Korea’s state-run news agency KCNA stated that the military is “examining the operational plan” to strike Andersen Air Force Base on the U.S. territory of Guam “to send a serious warning signal to the U.S.” That prompted a twitter response from the President:
With the sabers rattling ever-louder, gold has resumed its uptrend with focus back on the high for the year at 1296.06. A convincing move above this level would have rather bullish technical implications.
Gold firmed overseas as the dollar came under renewed pressure. While price action for the yellow metal remains confined to last Friday’s range for now, the underlying technical and fundamental biases remain to the upside.
Softer stocks are providing an additional boost for gold, but here too, the trend remains unquestionably positive. Global shares are being weighed today by a more pronounced than expected slowdown in Chinese export growth, which is indeed cause for concern.
The NFIB Small Business Optimism Index rose to 105.2 in July. Chain store sales rose 2.4% in the week ended 05-Aug. JOLTS Job Openings for June and IBD/TIPP Economic Optimism Index for August come out later this morning. There is also a $45 bln 4-week bill auction and a $24 bln 3-year note auction.
Gold starts the week modestly lower in the wake of Friday’s better than expected jobs report. However, the firm headlines numbers did nothing to alter market perceptions that the Fed is on pause through September.
The central bank’s primary concern is inflation, which remains illusive. With the Fed on hold, the downtrend in the dollar is likely to persist, which bodes well for the uptrend in gold.
The July Labor Market Conditions Index and June consumer credit come out later this morning. We’ll also hear FedSpeak from Bullard and KaskKari. Canadian markets are closed today in observance of Civic Holiday.
Gold has retreated into the recent range following this morning’s better than expected jobs report for July. The low for the week at 1256.50 remains protected at this point.
Nonfarm payrolls rose 209k in July, above expectations of +181k. June was adjusted higher as well to 231k. The unemployment rate edged lower to 4.3%. Hourly earnings rose 0.3%, in line with expectations.
That’s a good jobs report, but it does not improve the odds of a September rate hike. The anticipated pause in the Fed’s tightening cycle is based exclusively on the absence of inflation.
Nonetheless, gold posted solid gains over the previous 3-weeks and the dollar has fallen significantly. The jobs numbers is perhaps a good excuse to take some profits ahead of the weekend.
However, I suspect downticks in gold will attract buying interest, and upticks in the dollar will attract sellers. The fundamentals continue to favor the respective trends.
Gold continues to trade near the high end of the recent range. Even modest downticks have been attracting buying interest, which bodes well for additional gains.
Initial jobless claims fell 5k last week to 240k, in line with expectations. Later this morning, we’ll see factory orders for June and services PMI/ISM for July.
The BoE held steady on rates, in line with expectations, while downgrading both its growth and inflation outlooks. Sterling came under pressure as the market pushed back expectations of an initial rate hike.
Weakness in the pound may actually provide a little bit of support to the dollar. The dollar index is in fact consolidating in a narrow range after falling to a 14-month low yesterday. This year’s tumble in the dollar has provided a stiff tailwind for gold, which is expected to continue.
Gold starts the U.S. session slightly lower, but generally firm within the recent range. Persistent weakness in the dollar continues to underpin the yellow metal.
The ADP employment survey came in at 178k for July, below expectations of +182k. However, June was revised up to +191k, from +158k previously. Median expectations for July nonfarm payrolls are +182k. That critical report comes out on Friday.
Amid rising talk about the stock bubble, the DJIA reached 22,000 this morning. As we noted in yesterday’s DMR, former Fed Chairman Alan Greenspan says the real bubble is in the bond market. Former Fed insider Danielle DiMartino-Booth had a smart response to Greenspan’s contention:
The risks of a correction are arguably considerable. Gold may be garnering some support from investors hedging that growing risk.
Gold remains well bid, within striking distance of the 6-week high established last week at 1270.83. Fresh 6-week highs would return focus to the high for the year set in early-June at 1296.06.
June personal income disappointed, coming in unchanged, against expectations of +0.4%. May was revised lower to +0.3%. With incomes continuing to languish, it is not surprising that inflation pressures remain weak.
Personal consumption expenditures (PCE) rose a scant 0.1%, in line with expectations. Prices were unchanged, while prices excluding food and energy edged up 0.1%. Inflation remains elusive, which further solidifies expectations that the Fed is on hold for September.
Later this morning we’ll get manufacturing PMI and ISM, along with construction spending and domestic auto sales.
Gold remains well bid after gaining 1% last week, and more than 4% over the previous 3-weeks. A number of key technical levels have been exceeded in recent weeks, shifting focus to the 1296.06/1300.00 level.
The Fed blinked last week in the face of slowing inflation and persistent tepid growth. After a rather dovish FOMC statement, September rate hike prospects crashed to zero-percent. More recently, they edged back up to 1.4%, but I think we can call September off the table at this point.
While advance Q2 GDP met expectations last week, the negative revision to Q1 growth added further weight to those rate hike expectations and therefore the dollar. Ongoing weakness in the greenback should continue to provide a tailwind to the gold market.
Today’s U.S. calendar has July Chicago PMI, June pending home sales, June ag prices and the Dallas Fed index for July. PCE comes out tomorrow and will likely confirm inflation weakness seen in the advance GDP report. On Friday we’ll get the July jobs report. Expectations for nonfarm payrolls is +181k. The jobless rate is expected to tick down to 4.3%.
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.