Category: Gold Price

Gold rises but U.S. rate expectations cap gains


Reuters/Maytaal Angel/10-10-17

Gold touched its highest in nearly two weeks on Tuesday, supported by a softer dollar and geopolitical tensions in Spain and North Korea, though gains were capped by expectations of another U.S. interest rate
increase.

…Fed funds futures showed traders were pricing in a nearly 90 percent chance of a December rate increase.

PG View: The article also points out that the gold-silver ratio suggests that “silver is undervalued” and that “Silver’s supply and demand dynamics are supportive of
higher prices in light of stagnating mine output and firming industrial demand.”

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

Morning Snapshot: Gold more than $30 off Friday’s low

USAGOLD/Peter Grant/10-10-17

Gold extended to the upside in overseas trading amid rising geopolitical risks and mounting concerns that the President is going to have difficulties passing tax reform. The yellow metal is up more than $30 since hitting an 8-week low at 1260.10 on Friday.

Catalonian President Puigdemont is slated to address parliament today and is expected to declare independence from Spain, or at least a movement toward independence. Spanish PM Rajoy has vowed that “Spain will not be divided” and that he is prepared to employ “all means” within the law to preserve national unity.

Bloomberg has reported that Spanish National Police are in place and prepared to arrest Puigdemont. If the Catalan police attempt to shield Puigdemont, there is the risk of violence. However, it is the longer-term and broader implications for Spain and Europe that are of concern to markets.

The Hill reports this morning that based on recent rhetoric, Kim Jong Un may believe that a U.S. decapitating strike is imminent. That may prompt the North Korean leader to launch a preemptive strike.

There is growing concern that President Trump’s tax reform plan is losing momentum. This had been a big driving force in the stock market rally as investors salivated over the proposed corporate tax cut. This is a must-win issue for the President, given the failure of repeal-and-replace and the lack of progress on immigration reform and the the wall.

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

Gold higher at 1290.36 (+7.01). Silver 17.20 (+0.227). Dollar lower. Euro higher. Stocks called higher. U.S. 10-year 2.36% (unch).

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The Daily Market Report: Gold Rebounds With Some Fed Officials Concerned About Jobs


USAGOLD/Peter Grant/10-09-17

Gold firmed in overseas trading as Chinese markets reopened after the long Golden Week holiday. Additionally, the North Korean situation seemed to be escalating yet again, providing a bit of a safe-haven bid.

U.S. markets are on a partial holiday, with the Treasury market closed today, but focus remains on the mixed data in recent jobs report. On Friday, the Labor Department reported that nonfarm payrolls dropped 33k in September. It was the first negative print in 7-years, but markets were quick to dismiss it as hurricane distortion and latch on to the uptick in wages and the drop in the unemployment rate.

Nonetheless, St. Louis Fed President Bullard called the negative number “startling.” As noted in my Friday commentary, the NFP data rolled over long before Friday’s negative print and the current hurricane season.

I’m sure the official Fed line will categorize weakness in payrolls as “transitory,” just as they have for inflation. Bullard thinks we need to see more data before committing to another rate hike and I suspect Minneapolis Fed President Kashkari will likely echo that sentiment when he speaks at a regional economic conference tomorrow.

Surprisingly, Fed funds futures as of Friday’s close continue to see a rate hike in December as all-but a sure thing. We’ll see if those expectations have tempered somewhat when that market reopens tomorrow.

For now, gold remains consolidative to corrective. The fact that losses seem to have stalled ahead of the 200-day moving average is encouraging, as is today’s move back above the 100-day MA. A rebound above $1300.00/1308.80 will further ease pressure on the downside and return a measure of confidence to this year’s uptrend.

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Posted in Daily Market Report, Gold News, Gold Price, Gold Views |

Gold recoups previous week’s losses as dollar steadies


Reuters, via CNBC/10-09-17

Gold rose on Monday, erasing all of the previous week’s losses, as a steadier dollar and the resilience of a key chart level removed some downward pressure, while the return of Chinese buyers to the market also lent support.

Prices fell for a fourth week to hit a two-month low on Friday, after an upbeat reading of U.S. wage growth and unemployment supported expectations for a U.S. interest rate hike in December, pushing the dollar and Treasury yields higher.

Gold’s resilience above its 200-day moving average at $1,253 an ounce provided some reassurance to buyers, however, helping it rebound.

…”For the time being, gold may have bottomed out,” ABN Amro analyst Georgette Boele said.

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Morning Snapshot: Gold firms on geopolitical risks, “startling” drop in U.S. payrolls

USAGOLD/Peter Grant/10-09-17

Gold starts the week at a 5-session high after finding support on Friday at the 1260.00 level in the wake of September’s negative nonfarm payrolls print. Heightened geopolitical tensions are also providing support to the yellow metal.

St. Louis Fed President James Bullard called the negative NFP number “startling” and said more data were needed before committing to a December rate hike. Nonetheless, Fed funds futures continue to suggest the probability of a rate hike is all-but a sure thing.

There will be quite a bit of FedSpeak again this week. We’ll see if anyone else is troubled by the deterioration in the labor market. As noted in commentary on Friday, the trend in payrolls rolled over long before this hurricane season.

Geopolitical tensions are on the rise again amid expectations of an impending North Korean missile tests. The UK is reportedly developing a war plan as such a test may result in a U.S. military response.

The Treasury market and the Fed are closed today for Columbus Day. However, Chinese investors are back in the mix after the long Golden Week/National Day holidays.

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

Gold higher at 1283.34 (+6.52). Silver 16.95 (+0.143). Dollar lower. Euro higher. Stocks called higher. Treasuries closed.

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Posted in Gold Price, Markets |

Gold Week in Review (Video), October 06, 2017

Related links:

CME FedWatch Tool

Germany’s golden decade

Gold Market Is In ‘Very Good Shape’ – Rick Rule

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Posted in Gold News, Gold Price, Gold Views, USAGOLD TV |

The Daily Market Report: Gold Rebounds From 8-Week Low


USAGOLD/Peter Grant/10-06-17

Gold has rebounded after falling to an 8-week low in the wake of this morning’s jobs report. The yellow metal is now higher on the day and more than $10 off the intraday low.

Nonfarm payrolls for September saw the first loss of jobs in 7-years. The NFP print was -33k, well below expectations of +87k, versus a positive revised +169k in August (was +156k). That low expectation was already deemed to have taken into consideration hurricane distortion, so today’s miss was pretty significant.

Nonetheless, the market was quick to dismiss the bad number as hurricane “noise” and latch on to the better than expected 0.5% rise in average hourly earnings. However, there is perhaps some reason to be suspicious.

Additionally, the trend in payrolls had rolled-over long before today’s negative print and long before this hurricane season.

Today’s intraday rebound in gold — and retreat in the dollar — may just be profit-taking ahead of the weekend, but it could also indicate that investors are taking a more discerning look at today’s data and eschewing that initial spin.

Speculation this morning that North Korea may stage another missile test as soon as next week has heightened risk aversion. A Russian diplomat recently returned from the DPRK told reporters that the mood in North Korea was “rather belligerent” and that they may have a missile capable of reaching the west coast of America.

With the additional risk that Catalonia may declare independence from Spain on Monday, risk appetite seems to be evaporating. How Spain might react to that declaration of independence and the broader implications for the EU present considerable uncertainties. I don’t believe Spain can allow this to happen, so I envision the police or military moving to block access to the Catalonian parliament or even detaining key politicians.

At this point, the Fed funds futures market sees a December rate hike as all-but a sure thing. However, December is still a long way off and those expectations can only be trimmed from here.

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Posted in Daily Market Report, Gold News, Gold Price, Gold Views |

Gold has recouped post-NFP losses and is now trading higher on the day (more than $10 off intraday low).

So, is this short covering ahead of the weekend or have investors taken a more discerning look at today’s data?

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Morning Snapshot: Gold defensive as markets shrug-off weak jobs data as weather distortion

USAGOLD/Peter Grant/10-06-17

Gold remains defensive, edging to a new 7-week low as the market seems inclined — at least initially — to shrug off the weak headline jobs data as hurricane distortion. The dollar index reached a 10-week high, modestly exceeding the August high at 94.15.

U.S. nonfarm payrolls fell 33k in September, well below expectations of +87k, versus a positive revised 169k in August (was +156k). July was revised down to 138k, from 189k previously.

While the hurricanes clearly affected the data in September, payrolls began trending lower earlier in the year, before the bad weather rolled in. This may in reality not be transitory at all. So the question now is, how will the Fed view the data? They will likely be encouraged by the beat in earnings.

There is FedSpeak from Kaplan, Bostic, Dudley and Bullard today, so we won’t have to wait long for the central bank’s initial spin. In fact, Dalls Fed hawk Kaplan has already indicated on CNBC that he’s “not there yet” with regard to a December hike, but is open minded.

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Gold easier at 1268.02 (-1.26). Silver 16.61 (-0.015). Dollar higher. Euro lower. Stocks called lower. U.S. 10-year 2.37% (+2 bps).

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Gold Is ‘Worthy Of Greater Attention’ – Bloomberg Intelligence

KitcoNews/Anna Golubova/10-05-17

“With the record-setting stock market barely beating gold, the metal may be worthy of greater attention,” noted the commodity analyst in a report Wednesday.

…“Despite all of the attention on stocks, gold may be looking ahead to a more favorable endgame at a steep discount to historical highs with inflation brewing, a potential dollar peak and the lowest CBOE Volatility Index ever,” McGlone said. “The higher stocks go, the greater the reversion risk, apparently supporting gold.”

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The Daily Market Report: Gold Consolidates at Low-End of Range as Stocks/Dollar Gain


USAGOLD/Peter Grant/10-05-17

Gold is maintaining a consolidative tone at the low of the recent range, weighed by a firmer dollar and the risk-on mindset that continues to drive stocks higher. Look for price action to be limited ahead of tomorrow’s important release of September jobs data.

The dollar index has eked out a new 7-week high at 93.96, but the August highs at 94.15 remains intact at this point. Dollar strength is being driven primarily by weakness in the euro, amid uncertainty as to the broader implications for Europe if Catalonia declares its independence from Spain on Monday.

Interest rate differentials continue to favor the dollar as well. While Janet Yellen laid out a number of concerns in a speech last week that could warrant easier monetary policy, the market now sees an 81% probability of a rate hike in December.

There does seem to be some optimism about growth, but inflation remains persistently weak. Those rate hike expectations may be tempered somewhat if the jobs report is weaker than expected. At this point, median expectations are looking for 87k new payrolls added in September and the jobless rate to hold steady at 4.4%.

If the real underlying purpose of tighter policy is to let some of the air out of asset bubbles, clearly the Fed is going to have to get more aggressive. At this point, good news is good news and bad news is good news for stocks. That however can not go on forever and gold is displaying good resilience in the face of this solid risk appetite.

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Posted in Daily Market Report, Gold News, Gold Price, Gold Views |

Gold edges higher on bargain-hunting after correction

Reuters/Eric Onstad/10-05-17

Gold ticked higher on Thursday as some speculators bet that a slide from last month’s peak had run its course as they waited for more clues on whether U.S. interest rates would be raised.

…”Now the market is looking for data that can solidify the sentiment that the correction is over, but so far we haven’t really seen that. The Fed speakers later today and the job report tomorrow may give indications of whether the Fed wants to act or not in December.”

…”The North Korea news has died down but it could come back at any time. I would be pretty cautious to go short from here…”

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Germany’s golden decade


World Gold Council/10-05-17

Germany’s gold investment market has boomed in the past 10 years. In the face of successive financial crises and loose monetary policy, German investors turned to gold to protect their wealth. In response, new product providers entered the market making it easier for people to invest. Last year, more than €6bn was ploughed into gold investment products in Germany and, encouragingly, there is room for further growth: consumer research indicates there is latent retail demand which the industry can tap into.

In 2016, €6.8bn was ploughed into German gold investment products

PG View: That’s really impressive demand for a safe-haven when the mainstream financial press is telling us everything is great. The Germans seem to think otherwise . . .

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Morning Snapshot: Gold consolidates ahead of tomorrow’s NFP data

USAGOLD/Peter Grant/10-05-17

Gold is consolidating within yesterday’s range as the market looks ahead to tomorrow’s jobs report. Solid resistance in the dollar index has capped the upside thus far, which is helping underpin gold as well.

U.S. initial jobless claims fell 12k last week as hurricane affects work there way through the system. However, a soft 87k rise in nonfarm payrolls is anticipated for September, with perhaps some downside risk based on the ADP jobs survey miss yesterday.

Recent strength in PMI data has pushed December rate hike expectations back above 80%, but weak jobs data could reverse that bias. If rate hike expectations dim again, look for the greenback to retrace recent gains, shich should bolster gold.

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Gold better at 1276.36 (+2.13). Silver 16.70 (+0.117). Dollar firm. Euro lower. Stocks called higher. U.S. 10-year 2.32% (unch).

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Gold Market Is In ‘Very Good Shape’ – Rick Rule

KitcoNews/Daniela Cambone/10-04-17

Despite a slip in the gold price, one longtime expert says the market is still in “very good shape.” Speaking with Kitco News, Sprott U.S. Holdings CEO Rick Rule said he thinks gold is setting itself up for further gains. “The most important determinant of gold prices for the last 40 years has been they have been negatively correlated with faith the U.S. dollar and faith in the U.S. 10-year treasury,” he explained. “The U.S. 10-year Treasury is, I believe, close to the end of a 35-year bull market. That would suggest gold is much closer to the beginning of a bull market.”

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Gold gains as talk of dovish Fed chair knocks dollar


Reuters/Maytaal Angel/01-04-17

Gold rose on Wednesday after marking a seven-week low the previous session, as the dollar dipped on talk that a dovish Federal Reserve chair would be appointed next year.

The greenback eased against a currency basket after a Politico report said Fed Governor Jerome Powell was favoured by U.S. Treasury Secretary Steven Mnuchin over former governor Kevin Warsh. Janet Yellen’s term as chair expires in February.

Powell is seen as more dovish than Warsh, who has criticised the Fed’s bond-buying programme in the past.

PG View: And thanks to Jeff Gundlach, über-dove Neel Kashkari has been forced into the mix as well.

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Posted in Central Banks, Fed, Gold News, Gold Price, Gold Views, Politics |

Morning Snapshot: Gold firms as dollar retreats from resistance

USAGOLD/Peter Grant/10-04-17

Gold firmed in overseas trading after the dollar backed off its recent highs. While some of the yellow metal’s gains have already been retraced, the dollar is up against a formidable resistance level and is quite overbought.

The U.S. ADP jobs survey came in below expectations, weighed by weather affects. This sets up some downside risk for the already weak September nonfarm payrolls expectations.

Reuters is reporting that Catalonia will declare independence from Spain on Monday. Does Mariano Rajoy and the government of Spain allow that to happen? Given the violence already used in an effort to squelch the referendum, will they go so far as to shut down the Catalonian Parliament?

Jeff Gundlach is predicting that Neel Kashkari will be the next Fed chair. “He happens to be the most easy money guy that’s in the Federal Reserve system today and that’s why he may win,” said Gundlach. That’s the exact reason that I thought he might seek to reappoint Yellen and why Kevin Warsh was an unlikely candidate. Easy policy and a weak dollar would certainly make execution of President Trump’s economic agenda more likely to be successful.

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Gold higher at 1277.88 (+5.07). Silver 16.72 (+0.081). Dollar lower. Euro higher. Stocks called lower. U.S. 10-year 2.31% (-1 bp).

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The Daily Market Report: Gold Firms Slightly as Dollar Meets Resistance


USAGOLD/Peter Grant/10-03-17

Gold firmed slightly intraday after eking out a 7-week low in overseas trade. The yellow metal continues to be pressured by heightened risk appetite associated with the President’s tax cut proposal and a firmer dollar.

The greenback has garnered support both from the proposed tax cut and rising expectations that the Fed will lift rates one more time this year, despite persistently weak inflation. The dollar index also set a 7-week high today, shy of good resistance at 94.14.

The overall trend remains unmistakably negative since peaking 103.82 early in the year. That means the dollar index is still down about 10% year-to-date, even after the last 3-weeks of gains.

As noted in this morning’s snapshot, the next big event will be the release of September jobs data on Friday. Expectations are running at just +87k for nonfarm payrolls, factoring in a significant weather related hit. Even if NFP misses expectations, the market may quickly discount the news as temporary hurricane fallout, but will the Fed discount a bad number as well?

North Korea threatened to “bring nuclear clouds to the Japanese archipelago,” while mocking PM Abe as a “headless chicken.” Japan is definitely within missile range and Pyongyang says they will be “the first victim of nuclear disaster in the world.”

Japan called the latest threats outrageous and provocative. I imagine they, along with South Korea, wish President Trump would quit poking the hornet’s nest via Twitter.

Until the U.S. evacuates not essential military personnel and family members from the region, it seems unlikely that the U.S. will initiate any action against the DPKR. However, the constant goading from each side makes the situation inherently unstable and provides an underpinning to the gold market.

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Gold Pares Losses As Bargain Hunters Step In To Buy The Dip


KitcoNews/Jim Wyckoff/10-03-17

Gold is trading near steady levels on the day, in late-morning action Tuesday. The early price weakness that saw the gold market hit a seven-week low overnight prompted traders to step in and buy the dip on some bargain hunting and on short covering from the futures traders. Gold bulls are still in trouble as prices are in a steep three-week-old downtrend on the daily bar chart. December gold was last down $0.10 at $1,275.80.

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Gold falls to 7-week low as rate hike expectations rise

Reuters/Peter Hobson/10-03-17

Gold fell to its lowest in seven weeks on Tuesday after strong U.S. economic data reinforced expectations of another interest rate rise in the United States this year and pushed the dollar and U.S. bond yields higher.

The CME’s Fedwatch indicator showed markets were pricing in a 77 percent likelihood of a December rate rise after Monday’s data showed a surge in U.S. manufacturing activity.

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Morning Snapshot: Gold remains soft near 6-week lows

USAGOLD/Peter Grant/10-03-17

Gold is trading in a narrow range, having edged to a new 6-week low overseas. Heightened risk appetite and December rate hike expectations have sparked a rebound in the dollar over the past three-plus weeks, which has weighed on the yellow metal.

Today’s economic calendar is very light with just September auto sales. Traders may already be looking ahead to Friday’s jobs data. Median expectations for nonfarm payrolls is just +87k. The unemployment rate is expected to hold steady at 4.4%.

Additionally, Chinese markets are closed this week for the Golden Week holiday, which is likely sapping Asian demand. This year they are calling it a “Super” Golden Week because the Mid-Autumn Festival coincides with the National Day holiday. China’s tourism administration says they expect about half of the 1.3 billion population to be on the move this week.

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Gold steady at 1270.81 (-0.56). Silver 16.60 (+0.013). Dollar firm. Euro higher. Stocks call higher. U.S. 10-year 2.35% (+1 bp).

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The Daily Market Report: Gold Remains Defensive Amid Heightened Risk Appetite


USAGOLD/Peter Grant/10-02-17

Gold retreated further to begin the week, setting a new 6-week low at 1271.15 amid heightened risk appetite and a firmer dollar. There has also been no significant heightening of geopolitical tensions of late, which may be also weighing on the yellow metal.

December rate hike expectations have eased somewhat in the wake of last week’s soft inflation data, but investors still seem to be thinking the Fed is more likely to tighten than not. Mixed data today didn’t offer any clarity on that point.

Minneapolis Fed dove Kashkari thinks the central bank should be cautious until inflation gets back to 2%. However, later today Dallas Fed hawk Kaplan will likely offer the contrary opinion.

Further stoking risk appetite is the GOP tax plan, which includes a significant cut to corporate taxes. While stocks are perhaps understandably optimistic about the likely impact on profits, there is also a reasonable concern that the lower tax revenue is going to lead to bigger deficits and a bigger national debt.

Amid the initial euphoria of lower taxes for some, little attention is being paid to the downstream implications for deficits, the debt, Treasuries, the dollar and by extension monetary policy. Can the Fed really pursue tighter policy if the tax plan is going to blow a hole in the budget?

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Gold hits near 7-week low as rising U.S. yields lift dollar

Reuters/Jan Harvey/10-02-17

Gold fell to its lowest since mid August on Monday as rising U.S. Treasury yields pushed the dollar higher, while concerns over violence during Catalonia’s independence vote at the weekend weighed on the euro.

Expectations that the Federal Reserve will push ahead with a third U.S. interest rate hike this year, upbeat U.S. data and talk of a possibly more hawkish successor to Fed Chair Janet Yellen all lifted Treasury yields.

…”The recent selloff is mostly related to a stirring of the reflation trade following the announcement by the Trump administration of the long-awaited tax reform proposal,” Mitsubishi analyst Jonathan Butler said.

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Morning Snapshot: Gold maintains defensive posture to begin the week

USAGOLD/Peter Grant/10-02-17

Gold remains on the defensive after Friday’s soft close. The yellow metal is being weighed by a rebound in the dollar to challenge last week’s highs and revived risk appetite amid investor hopes for U.S. tax cuts.

Dollar gains are primarily associated with euro weakness in the wake of the Catalonia referendum that has thrown Spain — and the broader EU — into crisis.

Today’s calendar includes Markit manufacturing PMI and U.S. manufacturing ISM for September, as well as construction spending for August. We’ll also hear FedSpeak from Dallas Fed hawk Kaplan.

While the geopolitical rhetoric between the U.S. and North Korea is still flying, the recent absence of new DPKR missile and nuclear tests has pushed the still percolating conflict off the front page. South Korea is anticipating that fresh North Korean provocations are in the offing for this month.

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