Category: Gold News

The Daily Market Report: Gold Defensive at Low End of Range

USAGOLD/Peter Grant/12-06-17

Gold is consolidating at the low end of the range. While the yellow metal did set a new 4-month low yesterday, the breach of support was just by a dime.

The market is now awaiting developments on the government funding front, which has reportedly met some opposition from conservative Republicans. In addition, the opposing sides of aisle continue to spar over the inclusion of DACA. Republicans are saying there is no way DACA will be in a funding bill, while Democrats are saying they will not vote for any legislation without it. Tick-tock; the government faces a shutdown on Friday.

One thing is for certain, the debt ceiling is going to have to be raised (or suspended). That is a fact both as a prerequisite to any new funding and to accommodate whatever version of tax reform ultimately gets signed into law.

It is widely conceded that the tax cuts will reduce federal revenue by $1.3 trillion to $2.0 trillion over 10-years. Even when scored dynamically — taking into consideration expectations for higher growth — revenue is expected to fall by $0.5 trillion to $1.7 trillion. That’s going to require more borrowing, resulting in a higher national debt.

There seems to be some skepticism about the magnitude of GDP growth attributable to the tax plan. Ongoing flattening of the yield curve actually portends recession.

That’s likely to be a topic of conversation at the FOMC meeting next week. Additionally, today’s revisions to Q3 productivity are troubling; particularly the negative revision to unit labor costs. Q3 ULCs were revised to -0.2%, from +0.5% previously and -1.2% in Q2 (was 0.3%). Real compensation declined 1.1% y/y, the fourth consecutive quarterly decline.

These data undermine the hopes that compensation was on the rise and would have a positive impact on inflation. This is something else the Fed is going to have to rationalize if they really intend to hike rates next week. It looks like below target inflation is going to remain “transitory” for a while longer.

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

Remember What Happens To Gold In December

SeekingAlpha/Andrew McElroy/12-06-17

…Since 2013, every sell-off in December has led to a sizable rally in Q1 of the next year.

In 2015 and 2016 the December low also happened to line up with a Fed rate hike. The extended sell off into the hike combined with overly bearish sentiment led to significant reversals.

Posted in Gold News, Gold Price, Gold Views |

Gold recovers from two-month low as dollar weakens

Reuters/Zandi Shabalala/12-06-17

Gold prices held near a two-month low on Wednesday, ahead of a vote over the U.S. tax reform plan but a potential government shutdown lent support.

…”A shutdown in the government should be positive for gold but that could be temporary because no one really expects the U.S. to default,” said Capital Economics commodities economist, Simona Gambarini.

Posted in Gold News, Gold Price, Gold Views |

Gold edging higher in late trading, after slightly exceeding the range low at 1260.10 earlier in the session.

Posted in Gold News, Gold Price |

The Daily Market Report: Gold Drops to Challenge Low-End of Range

USAGOLD/Peter Grant/12-05-17

Gold is down, challenging the low end of the range that has dominated for the past two-months. The yellow metal is being weighed by persistent optimism that tax reform is going to get passed this year, the impending government shutdown will be averted and the Fed will raise rates next week.

The current continuing resolution to fund the government expires on Friday. It’s a given at this point that a new budget will not be passed, but there is an expectation that another temporary spending measure will be reached in order to prevent a government shutdown. Of course another kick of the can does nothing to resolve the underlying problems, not the least of which is the massive and growing debt burden.

That debt burden is expected to grow significantly if the current version of tax reform is ultimately signed into law. The University of Chicago recently asked a panel of economic experts to react to the following statement:

If the US enacts a tax bill similar to those currently moving through the House and Senate — and assuming no other changes in tax or spending policy — the US debt-to-GDP ratio will be substantially higher a decade from now than under the status quo.

Not a single participant disagreed with that statement. When asked whether “US GDP will be substantially higher a decade from now than under the status quo,” a mere 2% agreed that it would. The rest were either uncertain or disagreed.

The Fed really needs to ask themselves during deliberations next week, how confident they are that tax reform is going to provide a fiscal jolt to the economy; to the point where they can continue removing monetary accommodations. If confidence is low — similar to the UC survey — then staying on hold seems the logical policy decision.

The continued absence of inflation and the flattening of the yield curve seem to be also in favor of leaving the Fed funds rate unchanged. However, with the pre-FOMC FedSpeak blackout underway, at this point it’s too late to try and change the market’s mind.

I also think the central bank is disinclined to surprise the market. If the Fed is worried about any of these factors, they may go ahead and hike rates, but issue a dovish policy statement.

With jobs data out on Friday as well, the next week or so has the potential to be pretty interesting. Gold sold off into year-end in both 2016 and 2017, only to rally back after the December FOMC. What’s different this year is that the year-end action has been more consolidative than an an actual sell-off.

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

Gold Looks Like a Bargain Just in Time for Christmas

Forbes/Frank Holmes/12-03-17

…As of my writing this, gold is trading around $1,280, up 11 percent in 2017. That’s off 5 percent from its 52-week high of $1,351 set in September. If it stays at its present level until the end of the year, the metal will end up logging its best year since 2010, when it returned 30 percent.

…Considering it’s faced a number of strong headwinds this year—a phenomenal equities bull run that’s drawn investors’ attention away from “safe haven” assets, lukewarm inflation and anticipation of additional rate hikes, among others—I would describe its performance in 2017 as highly respectable.

…What this means is that, compared to domestic equities, gold is highly undervalued right now. The gold-to-S&P 500 ratio, a time-tested trading indicator, is near 50-year lows. I see this as a strong buy signal, especially now as we await the Federal Reserve’s decision to lift rates this month.

PG View: Two days after this story initially appeared at Forbes, gold is now closer to 1260 than 1280.

Posted in Gold News, Gold Price, Gold Views |

These Factors Helping Gold Hold Up Near Bottom Of Range

USAGOLD/Allen Sykora/12-05-17

Gold prices are near the bottom end of their two-month-old trading range, but analysts say the precious metal does have a number of factors preventing a further breakdown through chart support, at least for now.

This includes uncertainty about how quickly Congress will reconcile differing versions of U.S. tax reform, the impact of this upon the federal deficit, along with ongoing geopolitical and political issues.

Posted in Gold News, Gold Price, Gold Views |

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.

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

Economist Jim Rickards on gold versus bitcoin — intrinsic value is meaningless for both but the bitcoin prices aren’t real

BusinessInsider/Jacqui Frank & Kara Chin/12-03-17

Jim Rickards is the editor of Strategic Intelligence and the author of Currency Wars: The Making of the Next Global Crisis. He believes gold can go to $10,000 an ounce but he is much more skeptical about bitcoin. Rickards doesn’t trust the bitcoin price action and doesn’t believe the cryptocurrency will fare well in a financial crisis.

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

Dovish Fed Prompts Hedge Funds To Buy Gold – Analysts

KitcoNews/Neils Christensen/12-04-17

…“The return of a low inflation narrative, as the minutes revealed many policymakers are concerned that inflation may remain weak for longer than expected, prompted dollar weakness and a flattening of the yield curve,” said Melek. “This saw the opportunity and carry costs of holding the zero-yielding assets reduced, leading to increased interest in the yellow metal.”

Looking ahead, Melek added that he expects to see gold well supported in the near term as hedge funds look for safe-haven investments to protect against escalating geopolitical risks and ongoing drama in Washington D.C

Posted in Gold News, Gold Price, Gold Views |

The Daily Market Report: Gold Consolidates Within Range

USAGOLD/Peter Grant/12-04-17

Gold is maintaining a consolidative tone in the lower half of the well defined range. Heightened risk appetite is limiting the upside for gold, as optimism over the tax overhaul boosts stocks.

The question now becomes, how quickly can Congress reconcile the House and Senate versions of the legislation? And what will that final version look like?

With the Christmas recess just a couple weeks away, the window did get something to the President’s desk before year-end is pretty small. Further complicating matters is the need to get at least a temporary spending measure in place before December 8.

Democrat leaders have reportedly agreed to a White House meeting on December 7, which again doesn’t give them much time to reach an arrangement. A similar meeting was scrubbed last week after President Trump chided Chuck Schumer and Nancy Pelosi via Twitter for some of their alleged demands and then said he didn’t “see a deal.”

The market is already looking ahead to Friday’s release of November jobs data and next week’s FOMC meeting. Median expectations for nonfarm payrolls is +198k, with the unemployment rate holding steady at 4.1%. Expectations for a rate hike continue to hover around 90% probability.

St. Louis Fed President James Bullard said last week that “there is a material risk of yield curve inversion over the forecast horizon if the FOMC continues on its present course of increases in the policy rate.” An inverted yield curve is a reliable indication of an impending recession so the implication here is that the Fed might want to stay on pause to prevent that from happening.

The market doesn’t seem to care; perhaps because Bullard is not a voter this year. However, there are other doves on the committee that do get a vote.

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

Gold Heads for Month Low as U.S. Senate Passes Trump’s Tax Cuts

Bloomberg/Eddie Van Der Walt & Ranjeetha Pakiam/12-04-17

Gold headed for the lowest close in a month as the dollar climbed after Senate Republicans on Saturday approved a rewrite of the U.S. tax code, stoking optimism over President Donald Trump’s stimulus plans.

…“In the early hours of Saturday morning, the U.S. Senate then passed a tax reform bill that envisages extensive tax cuts,” analysts at Commerzbank AG including Eugen Weinberg said in an emailed note. “Market participants regained their risk appetite as a result, so the gold price fell accordingly.”

PG View: Gold has actually been extremely resilient relative to the gains achieved in stocks.

Posted in Gold News, Gold Price, Gold Views |

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.

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

The Daily Market Report: Gold Turns Choppy Within Range, Amid Political Uncertainty

USAGOLD/Peter Grant/12-01-17

Gold rebounded on Friday amid heightened political uncertainty, which tempered risk appetite. All of Thursday’s losses — and then some — were recovered, leaving the low end of the well defined range protected. The DJIA was down 350 at one point in the day.

Former Trump administration insider Michael Flynn reached a plea deal with special prosecutor Robert Mueller. Flynn plead guilty this morning to lying to the FBI and is now cooperating with the Mueller investigation.

In a statement issued after he entered his plea in a federal courthouse in Washington, Mr. Flynn, 58, . . . said that he had agreed to cooperate with federal prosecutors, who are examining whether Mr. Trump’s campaign colluded with Russians during the election and whether the president or his aides sought to cover up those efforts. — NYT

There is speculation that Flynn will testify that he was directed to make contact with the Russians by a senior Trump campaign official, possibly even Donald Trump himself. The broader implications of such a revelation are hard to know, but certainly there is risk to the recent momentum on tax reform and the temporary spending resolution that needs to be passed before December 8.

Despite all the Flynn associated turmoil, word from Senate Majority Leader Mitch McConnell that “We have the votes” to pass tax reform legislation out of the Senate sparked a rebound in stocks.

The Senate version of the legislation could clear the upper chamber as soon as today. Democrats tried to force the bill back into committee by way of a procedural measure, but that effort has failed.

Nonetheless, uncertainty remains high and that should at least protect the downside in gold. A definitive rebound above $1300 is still needed to return a greater degree of confidence to the underlying uptrend that has dominated this year.

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

Gold jumps and stocks retreat on risk aversion amid Flynn headlines.

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

We talked to an economist who predicted the Great Recession about the next financial crisis

BusinessInsider/Graham Rapier & Sara Silverstein/12-01-17

Instead of using traditional macroeconomic models, Rickards prefers to borrow one from physics: complexity theory. Using this framework, Rickards proposes a scenario in which the world shifts partially back to the gold standard, with an ounce of gold being valued at $10,000 per ounce.

PG View: The Rickards segment begins at 2:05 and ends at 11:13.

Posted in Central Banks, Economy, Fed, Gold News, Gold Price, Gold Views, Markets, QE |

Gold inches up on weaker dollar; improved risk appetite weighs

Reuters/Vijaykumar Vedala/12-01-17

Gold edged higher on Friday as the dollar eased, but was still trading near the 3-1/2-week low touched in the previous session, with investors flocking to riskier assets amid a surge in U.S. equities.

…”There is a positive mood in the equity market. The U.S. dollar has been strong too (overall). So, it is not beneficial for investors to invest in the commodity market now,” said Dick Poon, general manager at Heraeus Metals Hong Kong Limited.

“People are focusing on stocks in the short-term and are also awaiting an interest rate hike by the U.S. Federal Reserve.”

Posted in Gold News, Gold Price, Gold Views |

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.

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

The Daily Market Report: Gold Retreats Into Lower Half of Range

USAGOLD/Peter Grant/11-30-17

Gold is down today, slipping to a two-week low within the well defined range. The yellow metal is being weighed by building optimism that tax reform is going to get passed, which has pushed stocks to record highs.

However, the stock market seems to be largely ignoring the very small window to get the Senate and House tax bills reconciled ahead of year-end. There also is the impending threat of a government shutdown at the end of next week, as well as the growing threat of war between the U.S. and North Korea.

Efforts to kick the can on the budget and debt ceiling are already underway. A stop-gap spending bill in the House would keep the government funded through December 22. That would reportedly be followed by a second temporary measure to get the government to the end of January.

One thing is certain, regardless of the outcome on the tax plan, the debt ceiling is going to have to be raised or suspended and the inevitable march higher will continue. That raises the question, who is going to be the buyer of all that new debt? Especially when you consider that the Fed is trimming its balance sheet.

The PCE data that came out this morning was a bit of a mixed bag, but the important core inflation reading rose to 1.4% y/y; still well below the Fed’s target of 2.0%. The spin will be that the uptick portends higher inflation in the months ahead, but the truth is that the trend for the year remains unquestionably negative.

The market still sees a 90.2% probability of a December rate hike. That FOMC meeting is December 12-13.

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

Inevitable Stock-Market Correction To Push Gold Out Of Range – Analyst

KitcoNews/Neils Christensen/11-30-17

Record-high equity markets remain the sector to watch as a correction could be the catalyst needed to push gold out of its narrow trading range, according to one market analyst.

While gold remains resilient with prices holding above its 200-day moving average, Fawad Razaqzada, technical analyst at said that he can’t get excited about gold until it pushes above the October high at $1,306 an ounce. However, he added that it could only be a matter of time before this happens.

Posted in Gold News, Gold Price, Gold Views |

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.

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

The Daily Market Report: Gold Retreats To Midpoint of the Range

USAGOLD/Peter Grant/11-29-17

Gold fell back into the range in early U.S. trading, driven by heavy selling in the futures market after an upward revision to Q3 GDP. That puts the yellow metal back around the midpoint of the well defined 1260.10/1306.04 range that has dominated for more than a month.

Generally good economic data of late has reinforced expectations of a December rate hike, even though Janet Yellen continues to be surprised by “subdued” core inflation. Supposedly, that’s the main reason that the Fed decided to pause their tightening cycle back in September.

October PCE data are out tomorrow, so we’ll see if the central bank’s preferred measure of inflation picked up at all last month. While Yellen continues to think the weakness is transitory, one has to wonder how long this must go on before she changes her tune.

Also weighing on gold is ongoing strength in the stock market, which has been bolstered by optimism about the GOP tax overhaul, which includes a substantial cut to corporate taxes. If the Senate votes along party lines the legislation will clear the Senate, but the Republicans can ill afford any defectors or abstentions.

Senators Ron Johnson (R-WI) and Steve Daines (R-MT) they oppose the legislation in its present form. There are also at least four Republican Senators that have legitimate concerns about how this legislation will impact deficits and the national debt, and even more on the fence for various other reasons.

Nonetheless, the market likes the fact that the legislation continues to move through the process. Whether something gets to the President’s desk before year-end is still very much in doubt.

Perhaps further complicating the matter is the fact that Congress needs to come up with a budget plan by the end of next week, and raise or suspend the debt ceiling. “I don’t see a deal,” said President Trump via Twitter yesterday. Or of course, they could kick that can yet again.

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

Gold ‘breakout’ coming soon to ‘eerily quiet’ market, metals expert says

CNBC/Stephanie Landsman/11-29-17

Gold’s trading activity has been unusually calm this year, but that may be about to change.

…”It’s tough with the events coming up — whether it’s the Fed or tax reform which is very, very important. I think that could lead to volatility,” Dudas said Tuesday on CNBC’s “Futures Now.”

…His 2018 year-end target calls for gold to hit $1400, an 8 percent gain from current levels. According to Dudas, higher inflation expectations in 2018 should be strong enough to push gold prices even higher.

PG View: Dudas sees a 19-20 handle for silver.

Posted in Gold News, Gold Price, Gold Views |

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.

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

Gold is down slightly ahead of the close, despite DPRK missile launch as tax plan optimism lifts stocks.

Posted in Gold News |

The Daily Market Report: Gold Remains Firm Near 6-Week Highs

USAGOLD/Peter Grant/11-28-17

Gold is up slightly, despite some robust economic data and some hawkish FedSpeak from Jerome Powell. The yellow metal remains underpinned and within striking distance of yesterday’s 6-week high at 1299.30 as a result of political and geopolitical uncertainty.

Both consumer confidence and the Richmond Fed index significantly beat expectations. U.S. home prices continued to rise in September as well, as indicated by the Case-Shiller and FHFA indexes. All of this bodes well for the highly anticipated December rate hike.

However, an unexpected surge in the trade deficit in October has prompted some negative revisions to Q4 GDP expectations. Goldman Sachs trimmed their outlook from 2.6% to 2.3%, while BofA cut their forecast from 2.3% to 1.8%.

Fed chair nominee Jerome Powell said, “The case for raising interest rates at our next meeting is coming together,” during testimony before the Senate Banking Committee. I’d say the case hasn’t really been made until there is some real evidence of rising inflation. PCE is out on Thursday.

Powell contends that it’s time for normalizing interest rates, but it’s pretty clear that old concept of “normal” no longer applies. I don’t believe anyone asked him at what level Fed funds would be considered “normalized.” Nonetheless, and largely as expected, this testimony seems to verify that Powell is inclined to continue the gradual tightening cycle started by Janet Yellen.

On the political front, President Trump tweeted this morning that he was pessimistic about reaching a deal with Congressional Democrats to fund the government beyond December 8th (that’s just a little more than a week away!). Chuck Schumer and Nancy Pelosi quickly pulled out of a meeting with the President that was scheduled for today. “We believe the best path forward is to continue negotiating with our Republican counterparts in Congress instead,” they said in a joint statement.

While Rand Paul has said he will vote for the Senate tax overhaul, there are still a couple of Republican holdouts. A vote may happen as early as Thursday, but Goldman Sachs sees passage before year-end as about a 50-50 proposition. Certainly if a funding deal isn’t reached by the end of next week, those prospects are likely to dim considerably.

North Korea has reportedly conducted a ballistic missile test. The Japanese Coast Guard has apparently reported that that the missile fell into the sea near Japan. This news is breaking as I write and there will be further updates.

This latest provocation comes after South Korea Unification Minister Cho Myoung-gyon warned that the DPKR is “developing their nuclear capabilities faster than expected and we cannot rule out the possibility Pyongyang may declare the completion of their nuclear program in a year.” This is rather ominous as both the Trump administration and military leaders have declared such a situation as unacceptable.

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

Gold Flirts With $1,300

Bloomberg/Susanne Barton/11-27-17

Gold futures climbed above $1,300 an ounce for the first time in six weeks as the dollar wavered and investors braced for an onslaught of economic data and political news.

Bullion rose for the third time in four days as a gauge of the dollar traded close to the lowest since September. A report later this week is forecast to show the Fed’s preferred gauge of inflation slowed in October, after Chair Janet Yellen cautioned last week that raising rates too quickly risks stranding inflation below the central bank’s target.

Bullion is up almost 13 percent since Dec. 31, on course for the best year since 2010, as geopolitical uncertainty underpins demand for the metal as a haven and divisions among U.S. central bankers persist over the path of rate policy.

Posted in Gold News, Gold Price, Gold Views |

Gold eases from six-week high ahead of Fed chair confirmation

Reuters/Jan Harvey/11-28-17

Gold eased back on Tuesday from the previous day’s six-week high as the dollar edged up ahead of a confirmation hearing for U.S. Federal Reserve chair nominee Jerome Powell.

In prepared remarks for the hearing released by the Fed on Monday, Powell defended the Fed’s use of its crisis-fighting powers, suggesting a broad extension of current Chair Janet Yellen’s stance on monetary policy.

However, there is some risk around the event which is supporting the dollar after its slide to two-month lows on Monday, analysts said.

Posted in Gold News, Gold Price, Gold Views |

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.

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

The Daily Market Report: Gold Jumps To 6-Week High Near $1300

USAGOLD/Peter Grant/11-27-17

Gold is up, having reached a 6-wwek high of 1299.30 in earlier U.S. trading. While gains stalled just shy of $1300, the bias remains to the upside and further challenges of this critical level seem likely.

Gold us being helped by recent weakness in the dollar. The dollar index fell through important support at 92.80 (12-Oct low) to establish fresh 9-week lows. More than 61.8% of the bounce off the September low at 91.13 has now been retraced, making that level a logical target. The DX is now well below the 20-, 50-, 100- and 200-day moving averages, lending credence to the bearish scenario.

Dollar losses gained momentum last week after the FOMC minutes from the November meeting came in more dovish than expected. There also seemed to be heightened concerns about asset valuations.

“In light of elevated asset valuations and low financial market volatility, several participants expressed concerns about a potential buildup of financial imbalances. They worried that a sharp reversal in asset prices could have damaging effects on the economy.” — Minutes of the Federal Open Market Committee, October 31-November 1, 2017

In that respect, the Fed has sort of painted themselves into a corner: The stock market seems to like everything the Fed does these days. Tighter policy and the implications of an improving economy have lifted stocks, while a more dovish Fed (September pause) has also buoyed stock because it means cheap liquidity.

At this point, the market still believes a December rate hike remains baked in the cake. At this point, if the Fed wanted to prick the stock market bubble they would likely have to turn much more hawkish than the market is presently expecting and I think they are disinclined to do so.

With the über-accommodative policy stance over the past decade, the Fed is very much responsible for pushing investors out along the risk curve. Pensions should be of particular concern, because if stocks seriously correct, the already underfunded situation of many public pensions is only going to get worse.

Stocks however will ultimately correct, perhaps as a result of a central bank miss-queue, but more likely due to some external factor outside the control of the central banks. When the next crisis comes, financial writer and publisher John Mauldin believes “central banks and governments will react in ways that are even more unthinkable” than the measures they employed during the financial crisis.

At that time, as the world’s central banks pumped liquidity into the financial system, gold soared to record highs. I suspect the results the next time will be the same.

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