Gold extended to the downside in overseas trading before stabilizing near unchanged. The dollar has eased somewhat after eking out a 6-week high in earlier trading, helping to buoy gold.
U.S. Q2 GDP (3rd report) was revised up to 3.1%, in line with expectations, versus 3.0% previously and 1.2% in Q1. The U.S. advanced goods trade gap narrowed to -$62.9 bln in August. U.S. initial jobless claims rose 12k to 272k last week, above expectations of 268k.
Later this morning we’ll get August agriculture prices and M2 for the week ended 18-Sep. FedSpeak is due from George, Fischer and Bostic.
China has ordered that all North Korea connected business be shut down within 120-days. This forceful move by the DPKR’s closest ally may move the ball on a diplomatic solution. However, more provocative actions by North Korea are still anticipated, which is an underpinning of the gold market.
Gold remains defensive in the face of a rising dollar and the rising belief that the Fed will hike rates in December, regardless of weak inflation and growth risks. The yellow metal is slipped to new 4-week lows below 1287.50.
Fed Chair Yellen said yesterday that gradual rate hikes remain appropriate, despite misjudgements on the labor market and inflation. While she opened the door for a possible reversal of course, the market ignored that and prospects for a December rate hike jumped. Yields and the dollar rose as well, putting gold under pressure.
Todd ‘Bubba’ Horwitz, writing for KitcoNews, contends that Yellen essentially admitted that the Fed is “clueless”.
The real story is simple — all markets are on edge and looking to make big moves in one direction or the other. Looking into my crystal ball, I would expect equities, bonds, the euro currency and oil to break to the downside while gold, the U.S. dollar and commodities go higher. — Todd ‘Bubba’ Horwitz
U.S. durable goods order rebounded more than expected in August, although the overall trend remains troubling. The August pending home sales index and EIA crude data for last week are out later this morning. We’ll also hear FedSpeak from Bullard, Brainard and Rosengren.
Gold has retraced some of yesterday’s North Korea inspired gains, ticking back below $1300. The dollar index is testing 3-week highs, putting additional pressure on the yellow metal.
While markets seem increasingly inclined to quickly shrug-off the bellicose rhetoric and aggressive provocations from both North Korea and the U.S., the threat of an accidental conflict is very real. “The North Koreans assume that the threats will be enough to restrain US action but the US might be thinking the same thing, so you end up in a situation where a provocation from one side is seen by the other as an actual move towards war,” said Rodger Baker of Stratfor.
Today’s U.S. calendar has the Case-Shiller home price index for July, new home sales for August, consumer confidence for September and the Richmond Fed index. We’ll also hear FedSpeak from Brainard and Bostic. Janet Yellen will speak on “Inflation, Uncertainty, and Monetary Policy” this afternoon in Cleveland. That should be interesting . . .
Gold starts the week in a defensive posture, but still within last Thursday’s range. No significant escalations of the North Korean situation has heightened risk appetite somewhat, and a firmer dollar has weighed on the yellow metal.
The Chicago Fed National Activity Index sank to -0.31 in August. The Dallas Fed index comes out later this morning. We’ll also hear FedSpeak from Dudley, Evans and Kashkari.
Japanese PM Shinzo Abe announced that he will dissolve the lower house of parliament this week and consolidate his political power amid the looming North Korean threat. “We must not give into the threat of North Korea. I hope to gain the confidence of the people in the upcoming election and push forward strong diplomacy,” said Abe.
Here in the States, Republicans are scrambling to revise their latest healthcare bill in order to avoid yet another defeat on that front. Another legislative failure would further undermine the majority party and the President, making it increasingly unlikely that the economic agenda will be advanced this year in any meaningful way.
Gold begins the U.S. sessions slightly higher, as the consolidation ahead of this afternoon’s Fed policy announcement continues. Despite the past week of corrective/consolidative activity, the underlying trend remains positive.
The Fed is expected to hold steady on policy today, but announce some details about balance sheet normalization. The FOMC will also provide their economic projections and Janet Yellen will hold a press conference.
After President Trump’s fiery speech at the UN General Assembly, there is speculation that North Korea will respond with more missile tests. The longer and louder the sabers are rattled, the more likely it becomes that they are drawn.
The rest of the calendar is light today, with August existing home sales and EIA crude stocks.
Gold is consolidating at the low end of the recent range as the FOMC begins their two-day meeting. Heightened risk appetite and profit taking ahead of the Fed meeting has weighed on the yellow metal since last week.
Meanwhile, geopolitical and political tensions are seen as underpinning the market. While the dollar has firmed against the yen, driven by the risk-on attitude, the broader dollar remains weak.
Import and export prices rose more than expected in August, providing further evidence that inflation may finally be picking-up. I remain skeptical.
Housing starts dipped to 1.18M pace in August, just above expectations of 1.175M. Meanwhile, the U.S. Q2 current account gap widened to -$123 .1 bln, outside expectations of -$112.6, versus a revised -$113.5 bln (was -$116.8).
When the Fed announces policy tomorrow, they are widely expected to hold steady on policy. Markets are very interested to hear specifics on balance sheet normalization and to glean any clues as to the Fed’s intentions for December. That evidence might be found in the economic projections and Ms. Yellen’s press conference.
Gold remains in corrective mode. The yellow metal slipped in overseas trading to a fresh two-week low amid heightened risk appetite carried over from last week.
With the dollar still generally defensive and geopolitical tensions still elevated, downticks in gold seem to be position squaring ahead of this week’s FOMC meeting. While the Fed is expected to hold-pat, they may make an announcement about balance sheet normalization. A December rate hike remains a 50/50 proposition.
The two-day Fed meeting begins tomorrow. Also, tomorrow will be the General Debate at the UN General Assembly. North Korea will certainly be a hot topic.
The economic calendar is light today with the NAHB Housing Market Index for September and TIC data.
The Atlanta Fed’s GDPNow index for Q3 tumbled from 3.0% to 2.2% last week as hurricane effects take hold. Private GDP forecast are under pressure as well. All of this will give the Fed pause when it comes to further tightening this year.
Gold is trading lower, but within the confines of yesterday’s range. The yellow metal shrugged off North Korea’s latest missile launch, perhaps as such expectations had been previously priced in by the market.
South Korea test-fired missiles of its own in response to the latest provocation. The DPKR missile was the second to overfly Japan in less than a month. This, along with the recent bellicose threats to “sink” Japan, is driving conversations about increasing Japan’s military capabilities.
If Japan and South Korea were to increase military spending, China would likely respond in kind. That may result in an Asian arms race. And when a country has a lot of high tech weaponry, there’s always some faction that wants to use them . . .
Disappointing U.S. economic data should limit the downside for gold as well. Both August retail sales and industrial production missed expectations by significant margins. The Empire State Index for September, but not as much as was expected. The initial University of Michigan consumer sentiment reading for September comes out later this morning.
The dollar index has now retraced more than 61.8% of its recent correction, returning focus to the downside. The weaker dollar should underpin gold as well, suggesting the dip in gold is a buying opportunity.
Gold dipped briefly to a new low on the week after CPI for August came in just above expectations. The pickup in inflation, albeit slight, perhaps breathes a little life back into the prospect for one more rate hike before year-end.
U.S. CPI rose 0.4% in August, above expectations of +0.3%, versus +0.1% in July; +1.9% y/y. Core CPI was up 0.2%, in line with expectations; +1.7% y/y.
The BoE held steady on rates, as was widely expected. However, there were two dissents and the MPC believes “some withdrawal of monetary stimulus is likely to be appropriate over the coming months.” The prospect of tighter policy ahead pushed Sterling to new one-year highs.
North Korea let loose with another salvo of bellicose rhetoric in the wake of the latest UN sanctions, threatening to “sink” Japan and turn the U.S. into “ashes and darkness.” Amid speculation of another impending missile test, the yellow metal should remain underpinned by elevated geopolitical tensions.
Gold is consolidating corrective losses seen earlier in the week. Heightened risk appetite is applying the pressure, while persistent political and geopolitical risks underpin the yellow metal.
U.S. PPI rose 0.2% in August, below expectations of +0.3%, versus -0.1 in July. Core PPI rose just 0.1%, also below expectations. Tomorrow we’ll get July CPI. The ongoing absence of inflation is going to make it difficult for the Fed to further tighten policy this year.
Further unwinding of December rate hike expectations will keep pressure on the dollar. This week’s correction in the greenback has already lost momentum, with the bias definitely to the downside. Further retracement of Monday’s gains in the dollar index would shift focus back to the multiyear low set last week at 91.13. A weak dollar will continue to provide a tailwind for gold.
Gold remains defensive amid renewed stock market optimism as Irma weakens and North Korea remains quiet in the face of fresh UN sanctions. U.S. yields are higher, underpinning the dollar amid heightened risk appetite.
The U.S. calendar is light today with JOLT job openings for July and the NFIB Small Business Optimism Index for August, which ticked higher. Focus remains on inflation data later in the week and then next week’s FOMC meeting.
“We are done trying to prod the regime to do the right thing, we are now trying to stop it from having the ability to do the wrong thing,” said U.S. ambassador to the UN Nikki Haley yesterday. She did rattle the saber some as well by saying, “[I]f the North Korean regime does not halt its nuclear program, we will act to stop it ourselves.”
The new sanctions cap oil imports, but did not go so far as to completely block imports. Perhaps that’s a chip to still be played if the DPKR continues to advance their nuclear and missile programs.
Gold came under pressure in overseas trading after North Korea abstained from the much anticipated missile test over the weekend. Make no mistake though, the geopolitical drama is not over.
North Korea did celebrate there recent nuclear test on the occasion of the 69th anniversary of the communist government. With the UN expected to vote on new sanctions as early as today, the DPKR has warned that would “cause the US the greatest suffering it has ever gone through.”
There is nothing on the economic calendar today. Focus will be on 9/11 remembrances and hurricanes. Later this week, we’ll see PPI and CPI for August. Modest gains in both are expected, but inflation will remain below target.
With both political and geopolitical tensions high, and the corresponding correction in the dollar muted, this pullback in gold is likely to attract buying interest. First support is noted at 1330.60/1325.99.
Gold continues to power higher, establishing a new 13-month high at 1357.50 before easing modestly intraday. A push through the 1375/15/1388.46 would put the yellow metal at levels last seen in 2013.
Today’s economic calendar is light with July wholesale sales and consumer credit. We’ll also hear FedSpeak from Philly Fed centrist Patrick Harker.
Saturday is the anniversary of the founding of the DPRK. North Korea likes to mark such milestones with demonstrations of their nuclear might, so there is speculation that there will be another missile test this weekend.
How the U.S. might respond to yet another provocation remains to be seen, but tensions are likely to remain high. President Trump has expressed some reticence about military action in recent days.
While the debt ceiling issue has been kicked down the road to December, Congress still needs to hammer out a budget before the end of the fiscal year. Failure to do so — or at least pass a CR — may result in a government shutdown.
The dollar continues to lose ground, plumbing levels last seen in January 2015 and with little support below the market. If the greenback continues to fall, gold should continue to march higher.
Markets seem on edge heading into the seasonally volatile fall period for all the aforementioned reasons, which is piquing interest in gold. There is room for the yellow metal appreciate further on safe-haven demand.
Gold surged to new 11-month high of 1348.47 in early New York trading as the dollar index tumbled to new 33-month lows. Political and geopolitical tensions continue to offer support as well.
Weakness in the dollar is being primarily driven by euro strength, despite a rather dovish vibe from the European Central Bank. The ECB held steady on policy as was widely expected. Discussion of tapering specifics won’t occur until October, but it was reiterated that QE could in fact be extended if warranted. The central bank also expressed concerns about euro strength and further trimmed inflation expectations for 2018 and 2019.
Again, rather dovish, but the market seems to think that the ECB is more hawkish than the Fed. At some point the strong euro is going to start weighing on the prospects for recovery and Draghi and company will have to start jawboning it down.
Relief associated with the 3-month kick of the can on the U.S. debt ceiling seems to have been short-lived. While focus can now shift to a budget, nothing has been resolved and we’ll be right back in the same mess in about 12-weeks with a potential default looming.
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.