Category: Gold Views

The Daily Market Report: Gold Remains Range Bound, Awaiting Fed Chair Nominee and October Jobs Report

USAGOLD/Peter Grant/11-02-17

Gold is holding to the recent range, still awaiting the Fed chair nomination and tomorrow’s release of October jobs data. The dollar is consolidating as well, near 3-month highs after the Fed did nothing yesterday to temper December rate hike expectations.

The BoE did pull the trigger today on their first rate hike since 2007. UK CPI reached 3% in September, arguably cause to tighten, although Brexit related risks still abound. With the Fed on pause since the June hike, and inflation still below target, one has to wonder why the market still sees a December hike as a sure-thing.

The U.S. House tax proposal came in pretty much as expected:

A $1.51 trillion plan to cut taxes for corporations, reduce them for some middle-class families and tilt the United States closer, but not entirely, toward the kind of tax system long championed by businesses. — NYT

The plan is to get a piece of legislation through Congress and to the President by Christmas. If that happens, you can bet it won’t look anything like what was released today. Both Republican and Democrats, along with various special interests and lobbyists will seek to shape that final legislation to their liking in the weeks ahead.

The press is now widely reporting that centrist Fed Governor Jerome (Jay) Powell is a lock to get the nomination to replace Janet Yellen as Fed chair when her term expires in February. Powell is likely to seek to perpetuate the slow and steady normalization process initiated by Yellen.

Markets are anticipating a solid rebound in nonfarm payrolls in October. Median expectations are +318k, with the jobless rate holding steady at 4.2%. That’s a pretty high bar after September saw the first negative payrolls print since 2011. While there is indeed likely to be a post-hurricanes rebound, there is room for disappointment, especially when you consider how far off-base the forecasters were last month.

We may see heightened interest in gold investment if NFP is a miss tomorrow, as that would likely diminish December rate hike expectations. That would put the dollar under renewed pressure, boosting the yellow metal in the process.

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

Legend Says Gold To Surge Nearly $1,000, Ignited By Fiscal Hurricane

KWN/John Ing/11-01-17

…there is inflation, the Fed is playing semantics and sitting on an inflation time bomb. Already there are early signs of a return to “cost-push” inflation.

…Gold meantime edges higher in stealth- like fashion, as the ultimate store of value. Unlike digital currencies, gold cannot be created by a click. Gold is finite, withstanding the test of time.

…given the record debt levels and the global central bankers’ experimental move to “normalization”, we believe that the world’s biggest debt boom will end in the biggest bust.

…Most important is that gold’s recent rise shows investors are nervous. That is an important message for central banks who are unwinding their portfolios. While gold flirted with $1,300 level recently, we believe that $2,200 is still in sight within the next 18 months, particularly when so much fear stalks the world.

Posted in Gold Price, Gold Views |

Gold inches up as investors await Trump’s choice of Fed chair

Reuters/Peter Hobson/11-02-17

Gold prices inched higher on Thursday, helped by a weaker dollar and lower U.S. bond yields, as investors waited for the nomination of a new U.S. Federal Reserve chair and the unveiling of U.S. tax reform legislation later in the day.

The dollar weakened after the Fed’s decision on Wednesday to leave interest rates unchanged, but pared losses on solid U.S. data and a fall in sterling after the Bank of England accompanied its first interest rate rise in a decade with caution about future increases.

…U.S. President Donald Trump is expected on Thursday to nominate Fed Governor Jerome Powell to replace Janet Yellen as leader of the central bank. Powell is seen as less likely to push for rapid interest rate rises than other candidates.

Posted in Gold News, Gold Price, Gold Views |

Morning Snapshot: Gold remains consolidative within recent range

USAGOLD/Peter Grant/11-02-17

Gold is maintaining a consolidative tone at the low end of the range that has dominated for the past several weeks. Markets are awaiting the release of the House tax plan as well as President Trump’s nomination of the next Fed chair.

The House plan is expected to be focused on a permanent cut to corporate taxes, from 35% to 20%. Additionally, the number of individual income tax brackets are to be cut and the estate tax will be repealed. However, the devil is in the details and those details are likely to have significant implications for the national debt.

Fed Governor Jerome (Jay) Powell is widely anticipated to be nominated to replace Janet Yellen as Fed chair. Powell is a centrist and is likely to perpetuate the current policy tact.

Yesterday’s Fed policy statement did nothing to curtail expectations of a December rate hike. Fed funds futures put the probability at 97%, even though inflation remains below target.

A lot of focus will also be placed on tomorrow’s release of October jobs data. The market is anticipating a sizable rebound in nonfarm payrolls of 318k, following September’s surprising negative print.

As for today’s U.S. data, it has been generally positive with a better than expected rise of 3.0% in Q3 productivity (prelim) and bigger than expected drop in initial jobless claims.

The BoE raised rates by 25 bps today. It was the first hike in a decade and they indicated that 2 more would be needed during the next two years to control prices. With UK inflation running above target, this one may have made some sense, but some are already expressing concern that the BoE is being “too upbeat.”

Sterling has firmed, which is helping to check the upside in the dollar. That in turn, may help to underpin gold investment.

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

Trump’s Tax Plan Could Boost Gold and Silver

Bloomberg/Luzi-Ann Javier/10-27-17

Politicians can keep arguing whether President Donald Trump’s tax plan will benefit the middle-income families and U.S. businesses, but there’s one sector that could be a clear winner: precious metals.

The tax plan being considered in Congress would inflate the nation’s budget deficit and expand the debt, Bart Melek, head of global commodity strategy at TD Securities in Toronto, said at the Silver Industrial Conference in Washington. That deterioration in the nation’s fiscal standing is a recipe for higher silver and gold prices, he said. From 1984 through 2012, gold rose as the federal debt climbed relative to gross domestic product, Melek said.

Silver will outperform gold, surging as much as 19 percent to $20 an ounce by the end of next year, as global growth boosts industrial demand for the white metal just as mine supply slows, he said.

PG View: The House is expected to reveal their tax plan tomorrow and the calculations to determine the implications for the national debt will follow quickly…

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

The Daily Market Report: Gold Firms Ahead of Fed Policy Statement, Silver Surges 2.5%

USAGOLD/Peter Grant/11-01-17

Gold heads into the Fed policy statement on a modestly more positive footing within the range. The yellow metal set a new high for the week in earlier trading before moderating slightly.

The policy statement comes out at 2:00ET. It is widely anticipated that the Fed will hold steady on policy. What remains to be seen is if they will reinforce expectations of a December hike, or seek to temper those expectations with more dovish guidance.

As always, the jobs report is also going to be seen as a potentially significant market mover. The market is looking for a solid rebound from the dismal September print of -33k jobs. Median expectations are +318k nonfarm payrolls.

That’s a pretty high bar to attain, following the first negative print in 7-yeaers. Today’s ADP survey results offered some encouragement, coming in better than expected at +235k private payrolls. However, September was negatively revised from +135k to +110k.

Silver is showing particularly good buoyancy, gaining more than 2.5% and reclaiming the 17-handle. This could be some short-covering in the paper market ahead of the Fed decision, but it’s also worth noting the improving demand picture for physical silver. The U.S. Mint reported that silver eagle sales rebounded to 1,040,000 in October, up 225% from the 320,000 sold in September. Industrial demand is reported to be improving as well.

It is believed that gold and silver will benefit from the passage of tax reform, the details of which are expected to be revealed by the House tomorrow.

The tax plan being considered in Congress would inflate the nation’s budget deficit and expand the debt, Bart Melek, head of global commodity strategy at TD Securities in Toronto, said at the Silver Industrial Conference in Washington. That deterioration in the nation’s fiscal standing is a recipe for higher silver and gold prices, he said. — Bloomberg

Gold is arguably extremely undervalued relative to stocks and other risk assets, but silver is very undervalued relative to gold. We may be seeing early signs of positioning ahead of the tax plan and that deterioration of the nation’s fiscal position.

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

China’s Jan-Sept gold output down 9.98 pct y/y – state media


China Central Television said on Wednesday on its website, quoting data from the China Gold Association:

* China’s Jan-Sept gold output down 9.98 percent y/y to 313.09 tonnes

* China’s Jan-Sept gold consumption up 15.49 percent y/y to 815.89 tonnes

PG View: Tighter supply and stronger demand is a recipe for higher prices.

Posted in Gold News, Gold Price, Gold Views |

Germany fears EUROZONE MELTDOWN: German investors rush to buy gold

Express/Simon Osborne/11-01-17

Germany has become the world’s biggest buyer of gold amid fears of economic meltdown across the eurozone.

Figures from the World Gold Council (WGC) reveal the country invested a record £6billion in gold bullion and coins as well as in exchange-traded products.

Analysts say improved availability, low prices and growing demand due to loose monetary policy, economic uncertainty and volatile geopolitical factors are the three key reasons behind the German investors’s gold rush.

PG View: The Germans have real reasons to be concerned, but U.S. investors remain complacent. If the Eurozone melts down, there will be far-reaching implications for the global economy.

Posted in Gold News, Gold Views |

Gold climbs ahead of Fed statement, pick for Yellen replacement

Reuters/Jan Harvey/11-01-17

Gold climbed briefly back above $1,280 an ounce on Wednesday as caution ahead of this week’s confirmation of the new Federal Reserve chair and a policy statement from the bank prompted some to close out bets on falling prices.

Fed Governor Jerome Powell is widely tipped to take over from incumbent Janet Yellen at the head of the U.S. central bank next year. He is seen as a less hawkish and therefore more gold friendly choice than his main challenger John Taylor, a Stanford University economist.

…While the [Fed] is expected to leave rates unchanged, investors will be watching for any indications that it will press ahead with another increase next month.

Posted in Gold News, Gold Price, Gold Views |

Morning Snapshot: Gold firms within range

USAGOLD/Peter Grant/11-01-17

Gold is higher within the range, but remains limited by a firm dollar and stocks. The market is awaiting the Fed’s policy decision later today.

The Fed is expected to hold steady, keeping the December rate hike on the table. However, it might be worthwhile to temper tightening expectations going into year-end, just to give themselves some leeway in the event that inflation fails to pick up.

The ADP jobs survey came in stronger than expected, perhaps creating some upside risk for Friday’s nonfarm payrolls report. Expectations are presently +318k, with the unemployment rate holding steady at 4.2%.

Later this morning we’ll see manufacturing PMI and ISM, construction spending, EIA crude stocks and domestic car and truck sales.

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

The Daily Market Report: Gold Weakens Within Range as Dollar Recovers

USAGOLD/Peter Grant/10-31-17

Gold has turned defensive in the range once again, weighed by a rebound in the dollar. Upbeat U.S. data also buoyed risk appetite and stocks today.

U.S. home prices and consumer confidence continue to rise. The employment cost index jumped as well, which inspires hope that wage growth and then inflation might accelerate. However, as we saw yesterday, the Fed’s preferred measure of inflation remained sluggish in September.

Will that be worth mentioning when the Fed announces policy tomorrow? And if they do, will it temper December rate hike expectations?

The ECB came out with more dovish than expected guidance last week, as did the Bank of Canada. The latter likely had an inkling that the economy had contract in August, as the rest of us found out today.

The Canadian dollar came under pressure as hopes for tighter monetary policy evaporated. The yen also dropped today after the BoJ held steady with no mention of any plans for normalization.

As I mentioned in the Morning Snapshot, it might be in the best interest of the Fed to adopt a more dovish tone tomorrow, to better align with the current policy direction of the other major central banks. No change in policy is expected at this meeting and they will likely leave the door open for a December hike, but a tempering of the high expectations of that hike might be warranted.

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

Morning Snapshot: Gold retreats back into range as dollar firms on weaker yen

USAGOLD/Peter Grant/10-31-17

The consolidative tone in gold persists as the dollar remains firm and stocks rebound. The yellow metal still needs to climb back above $1300 to ease short-term pressure on the downside.

The BoJ left the policy rate unchanged at -0.1%, kept 10-year JGB rates capped “around zero” and will maintain the QE pace of ¥80 trillion per year. Despite optimism about both growth and inflation, guidance remains dovish. That pressured the yen, buoying the dollar in the process.

The Fed begins their two-day FOMC meeting today. When policy is announced tomorrow, no change is expected. While a December rate hike will remain on the table, it might behoove the central bank to start tempering those expectations; unless they truly believe inflation is on the verge of rebounding.

Expressed concern about the ongoing absence of inflation — which is the reason they paused in September — would likely halt the recent rise in the dollar. With the ECB, BoC and BoJ maintaining their dovish guidance, it might be in the best interest of the Fed to hint that the pause might be perpetuated into 2018.

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

Gold Inches Higher to Kick Off Action-Packed Week

WSJ/Amrith Ramkumar & Georgi Kantchev/10-30-17

Gold prices inched higher Monday, with many investors awaiting news later in the week that could swing prices.

On Wednesday, the Federal Reserve is scheduled to release its latest statement following a two-day meeting that could offer clues about its outlook for interest rate increases moving forward. Gold struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise. Additionally, President Donald Trump is expected to announce his nominee to be the next Fed chair this week. The Wall Street Journal reported that Mr. Trump is expected to nominate Fed governor Jerome Powell as his nominee.

Investors will also be paying attention to Friday’s monthly jobs report for the latest reading on the U.S. economy, which could affect expectations for future rate increases. Signs of inflation could also boost gold prices because some investors use the precious metal as a hedge against higher consumer prices.

“There’s some interest coming back into [gold] down at these levels.” — Bob Haberkorn, senior market strategist at RJO Futures.
Posted in Gold News, Gold Price, Gold Views |

The Daily Market Report: Gold Firms Intraday as Busy Week Gets Underway

USAGOLD/Peter Grant/10-30-17

Gold has firmed modestly intraday, but remains well contained within the recent range. A number of important events and data releases are slated for this week, which seems to have tempered risk appetite somewhat.

We’ll get policy announcements from the BoJ, Fed and BoE this week on 31-Oct, 01-Nov and 02-Nov respectively. The BoJ is likely to hold steady on the heels of Abe’s resounding elections victory. The Fed is expected to hold steady. The BoE may hike by 25 bps to at least reverse out the post-Brexit emergency rate cut.

The Fed policy statement will be closely watched for any indication about ongoing concerns about the absence of inflation. Today’s PCE data for September showed that inflation remains below target, which is the precise reason they did not tighten in September.

With a December rate hike fully priced in, arguably the risk is toward a more dovish statement. Will there be verbiage in the statement to rattle the conviction of the hawks? There is no press conference scheduled for this FOMC.

The White House has confirmed that President Trump will be making his nomination for Fed chair this week, reportedly on Thursday. Odds have seemingly shifted in favor of centrist Fed Governor Jerome (Jay) Powell.

The House is also expected to release the details of its tax cut legislation this week. Will those details be sufficient to keep the stock market bubble inflating, or will this be a classic case of ‘buy the rumor, sell the fact?’ And perhaps most importantly, what will be the implications for the national debt, bearing in mind that the debt ceiling comes back into play on December 4.

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

Gold steadies ahead of raft of central bank news

Reuters/Jan Harvey/10-30-17

Gold steadied on Monday as traders stayed on the sidelines before this week’s central bank meetings and policy news, including President Donald Trump’s expected announcement of the next Federal Reserve chair.

The U.S. central bank kicks off a two-day policy meeting on Tuesday, while the Bank of Japan and Bank of England also meet this week to discuss interest rate policy.

…”The front end of the U.S. rates curve doesn’t seem to have priced in a Taylor Rule Fed … which means that a surprise would send yields and the dollar higher, and risk assets down,” SG Forex said in a note on Monday.

Posted in Gold News, Gold Price, Gold Views |

Morning Snapshot: Gold remains range bound to begin busy week

USAGOLD/Peter Grant/10-30-17

Gold starts the week as it ended, consolidative within the recent range. The dollar is a little easier, as are stocks, with risk appetite tempered somewhat ahead of this rather busy week.

The first indictments in the Russian collusion investigation are occurring today. Former Trump campaign chairman Paul Manafort and his aide Rick Gates are supposed to turn themselves in to the FBI today.

The Fed’s two-day FOMC meeting commences tomorrow. No change to policy is anticipated, but markets will be looking for further clarification of the central bank’s intentions for December. The BoJ and BoE meet this week as well.

Today’s U.S. data are a mixed bag. Personal income and consumption jumped in September. However, core PCE inflation was up a scant 0.1%. The Fed still has an inflation problem, which was the primary reason they paused the tightening cycle in September.

Politico is reporting that President Trump will make his nomination for the next Fed chair on Thursday. They reported last week that the field had narrowed to John Taylor and Jerome Powell.

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

DOW To Lose 97% Against Gold

Matterhorn Asset Management/Egon von Greyerz/10-27-17

Little did I know in 1969 that Nixon two years later would change the destiny of the world for decades to come as the US came off the gold standard. By throwing off the shackles of a gold backed currency, there was no longer anything stopping the US government and the financial system from creating unlimited credit and printing infinite money.

The consequences have been a US and global credit expansion of gigantic proportions. Just in the US, credit has grown 47X from $1.5 trillion to $70 trillion.

…One thing is certain, gold will continue to preserve wealth and maintain purchasing power as it has done in the last few thousand years.

…if we take the next 10 years, gold (and silver) is likely to vastly outperform most conventional assets like stocks, bonds and property. The Dow is now the most overbought it has been in over 60 years with gold and silver depressed by a fake paper market.

…The Dow / Gold ratio crashed by 87% from 1999 to 2011. After a weak correction, the ratio is still down 60% since 1999.

…The current correction up of the ratio could go slightly higher but it is now very stretched and the downside risk is massive.

Posted in Gold News, Gold Views |

The Daily Market Report: Gold Range-Bound Ahead of Weekend

USAGOLD/Peter Grant/10-27-17

Gold appears poised to end the week on a consolidative note, well within the range that has dominated so far in October. That range is defined by the 1260.10 low from 06-Oct and the 1306.04 high that was set 10-days later.

Dollar gains and risk appetite continue to limit the upside for gold. Additional optimism about the U.S. economy was garnered from today’s better than expected 3.0% advance GDP print. That lends an additional measure of confidence to expectations that the Fed will indeed raise rates again in December.

The Catalan parliament votes to declare independence from Spain today. Spanish PM Rajoy quickly moved to invoke Article 155, dissolving the Catalan parliament, moving to fire Carles Puigdemont and his cabinet and calling for a regional election.

Tensions are high and there are risks for unrest over the weekend. Headlines following the initial independence referendum several weeks ago suggested Spain was on the verge of a civil war. That is probably even more true today.

Will Spain send in the national police and army troops to enforce direct rule? How will the people of Catalonia react?

Now that the budget has passed both the House and Senate, the GOP is obliged to release the specifics of their tax proposal. That should come next week and that will allow analysts to calculate the debt implications and I suspect they will be significant.

With the national debt and household debt at record levels, it’s reasonable to wonder just how much more debt this economy can tolerate. That in turn begs the question, why would the Fed raise rates into this situation; especially when inflation remains so subdued.

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

Gold catches a bit of a bid, leaving the near-term range low at 1260.10 intact.

Posted in Gold News, Gold Price, Gold Views |

Gold slips as dollar benefits from ECB bond-buying extension

Reuters/Zandi Shabalala/10-27-17

Gold prices touched their lowest point in nearly three weeks on Friday as the euro slipped against the dollar following the European Central Bank’s extension of its bond-buying programme.

Currency investors played a diverging monetary policy outlook, with the U.S. expected to raise interest rates again before the end of 2017 while Europe is not now expected to do so in the coming years.

Posted in Gold News, Gold Price, Gold Views |

Morning Snapshot: Gold remains defensive at low end of recent range

USAGOLD/Peter Grant/10-27-17

Gold remains defensive at the low end of the recent range, weighed by heightened risk appetite and a stronger dollar. Support in the yellow metal is well defined by the 1260.10 (06-Oct low).

U.S. advance Q3 GDP came in better than expected at 3.0%, essentially unchanged from +3.1% in Q2. This will help justify persistently elevated expectations for a December rate hike, even though the absence of inflation continues and that’s the “mystery” that prompted the Fed to pause in September.

The BoJ faces the same problem with October CPI coming in at +0.7% y/y. Don’t expected any move toward tighter policy anytime soon.

The dollar is rallying based on anticipated widening of interest rate differentials. Most of the world continues to lean toward easier policy, while the U.S. is in the midst of a tightening cycle (Sep pause notwithstanding). These dollar gains are keeping a lid on gold for now.

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

The Daily Market Report: Gold Falls Within Range as Dovish ECB Lifts Dollar

USAGOLD/Peter Grant/10-26-17

Gold has turned more defensive within the range, dropping to fresh 3-week lows. The yellow metal is being pressured by strength in the dollar after a dovish ECB pushed the euro lower.

The ECB held steady on policy as was widely expected. While QE was extended by 9-months, the monthly purchases were halved to €30 bln.

Mario Draghi maintained a dovish bias during his presser, stressing that an “ample degree of monetary stimulus remains necessary.” He also said that QE remains “open-ended” and could be extended. There is some speculation that cutting the size of the monthly purchases was a necessary reaction to an absence of supply.

News that the U.S. $4 trillion 2018 budget narrowly passed the House, is further stoking risk appetite. This is seen as another significant hurdle toward advancing tax cuts.

Politico cited an unnamed source, said to be close to the President, as saying that the field of potential replacements for Janet Yellen has been narrowed to Jerome Powell and John Taylor. The former being a centrist, the latter thought to be a hawk.

While this may be modestly moving the policy expectations needle toward hawkish, the White House has said that no final decision has been made. The President is likely to make the nomination before he leaves for Asia on November 3.

Another unnamed senior source that Politico described as very close to the process said it was not safe to assume Trump will nominate Powell or Taylor for the top spot at the central bank, saying he “changes his mind about it every day.” — Reuters

On the support side of the equation are geopolitical tensions regarding Catalonia and North Korea. And political tensions associated with various ongoing investigations and the recent discord among GOP Senators.

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

Gold dips as dollar gains versus euro after ECB decision

Reuters/Maytaal Angel/10-26-17

Gold dipped on Thursday as the dollar gained versus the euro after the European Central Bank said it would cut back its bond purchases but hedged the move by also extending the lifespan of its bond-buying programme.

The ECB’s decision to cut back bond purchases was widely expected and factored into gold prices and the dollar, with the move to extend the bond-buying programme’s lifespan taking the wind out of the euro’s rally versus the dollar.

…Also weighing on gold and boosting the dollar was fresh speculation that the next Federal Reserve chair could be a policy hawk following reports that current Fed chair Janet Yellen is out of the race.

Posted in Gold News, Gold Price, Gold Views |

The Morning Snapshot: Gold remains consolidative below $1300

USAGOLD/Peter Grant/10-26-17

Gold continues to consolidate below $1300 after ECB policy came in as expected: Steady on rates and smaller QE for longer. Mario Draghi’s press conference is ongoing.

U.S. initial jobless claims rebounded 10k last week, but the print was still below expectations. The trade gap widened in-line with expectations.

There are reports circulating this morning, citing Politico, that Janet Yellen and Kevin Warsh are out of the running for Fed chair. That may mean that the field has narrowed to John Taylor and Jerome Powell.

The dollar index is probing back above 94.00, buoyed by a dovish ECB and the resulting weaker euro. That is keeping gold defensive. Political and geopolitical tensions continue to provide support.

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

The Daily Market Report: Gold Consolidates, Awaiting Clarity on Several Fronts

USAGOLD/Peter Grant/10-25-17

Gold continues to consolidate in the recent range as the market seeks some clarity on Fed succession and ECB policy. The former is reportedly unlikely to happen this week, while the ECB will announce policy tomorrow.

The short list for the next Fed chair includes John Taylor, Jerome Powell and a reappointment of Janet Yellen. If these are really the only three in contention, then Janet Yellen is President Trump’s best bet for furthering his reflation agenda. Whether she would stay on or not is an open question. I wrote in great detail on this topic in yesterday’s DMR.

Tomorrow the ECB is expected to hold steady on policy, as the BoC did today. As for the QE question, there seems to be an expectation that the ECB will signal that it will buy fewer assets for a longer time. Sort of a taper, but not really, as Draghi may be hoping for signs that better growth prospects are taking hold before he really moves the central bank toward tighter policy.

Just a week after the Senate passed a budget proposal — a key step in advancing proposed tax cuts — the President’s support in the Senate has been rattled. Arizona Sentaror Jeff Flake said today that “a lot more” Republicans are poised to speak-out against Mr. Trump.

If the President is losing the support of the GOP, yet another key piece of his agenda may be in jeopardy. I would also point out that tax reform has been a primary driving force behind the stock market rally. If the tax cuts are not passed before year-end, there is some risk that equities could rollover.

Capital coming out of shares would find its way to safe-haven assets, including gold. If the yellow metal pushes back above 1308.80 in the near term, a resumption of the uptrend that has dominated this year would become likely.

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

Fed succession talk pushes gold to 2-1/2 week low

Reuters/Peter Hobson/10-25-17

Gold touched a 2-1/2 week low on Wednesday after reports that Republican senators favoured John Taylor to become the next head of the U.S. Federal Reserve drove U.S. bond yields to multi-month highs.

Taylor, a Stanford University economist, is seen as someone who could put the Fed on a path of faster interest rate increases compared with current Fed Chair Janet Yellen, whose term expires next February.

Upbeat U.S. durable goods and home sales data also bolstered the case for interest rate rises, helping push U.S. 10-year Treasury yields to the highest since March and yields on 30-year bills to the highest since May.

PG View: Subsequently, gold rebounded to trade higher in the range, leaving the range low from early-Oct well protected as the dollar index stalled ahead of important resistance at 94.00.

Posted in Gold News, Gold Price, Gold Views |

Morning Snapshot: Gold steadies as dollar gains stall

USAGOLD/Peter Grant/10-25-17

Gold is maintaining a generally consolidative tone within the recent range, as gains in the dollar index stalled ahead of head of important resistance at 94.00/14. The yellow metal needs to reclaim $1300 to ease short term pressure on the downside and return confidence to the dominant uptrend.

A better than expected Q3 GDP print for the UK sparked a rebound in Sterling, amid reinvigorated hopes that the BoE will raise rates next week, for the first time in more than a decade. This has weighed on the dollar.

U.S. data today were generally positive with durable goods orders, new home sales and home prices all beating expectations. The Bank of Canada will announce policy today (steady expected) and the ECB is up tomorrow.

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

The Daily Market Report: Gold Pulls-Back Within Range as Dollar and Stocks Rally

USAGOLD/Peter Grant/10-24-17

Gold pulled back within the range, weighed by risk appetite and a firm dollar. On the other side of the coin, are political and geopolitical risks offering support. These opposing forces have kept the yellow metal fairly well contained of late.

While the underlying trend remains positive, a definite push back above $1300 is needed to return focus to the high for the year at 1357.50. That high was established back in early-September.

President Trump’s impending choice for Fed chair is also weighing somewhat on gold, with a couple of policy hawks in contention. While the Fed chair does not set policy alone, a vocal hawk at the head of the table, would give the impression that rates are more likely than not to head higher.

My contention is that if “reflation” is the goal of the President, why hamstring yourself by appointing a hawk? It would seem that Janet Yellen might be the ideal choice. She is both a dove and a know commodity to the markets. However, there are considerable doubts as to whether the President will reappoint her, and whether she’d accept if asked to serve again.

At the other extreme is economist John Taylor, whose Taylor Rule suggests that the Fed funds rate should be closer to 4% than 1%. It would be difficult to convince the current FOMC to move away from the slow/steady tightening regime instituted by Yellen, but he would also be under constant external pressure to institute the rule that bears his name.

And it’s worth remembering that the Fed opted to hold steady on rates in September. The pause was largely inspired by the Fed’s inability to generate 2% inflation. While there have been some indications of hotter inflation more recently, it is largely thought to be associated with higher energy prices in the wake of the recent hurricanes. The situation with regard to inflation probably really hasn’t changed much since September, so why is the market fully pricing in a December rate hike?

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

‘Real’ Gold Bull Market Is Coming, It Just Needs This First – Pierre Lassonde

KitcoNews/Anna Golubova/10-24-17

Gold prices will only go up, rising as high as $1,400 next year, but the “real” bull market won’t get going until it sees an actual pickup in inflation, said mining magnate Pierre Lassonde.

…inflation could accelerate soon enough, with both reconstruction following the damage caused by hurricanes Irma and Harvey in the U.S. as well as a recovery in Europe moving the needle in the right direction, he said.

Posted in Gold News, Gold Price, Gold Views |

Gold slips on nerves ahead of Fed chair decision

Reuters/Eric Onstad/10-24-17

Gold dipped on Tuesday as investors nervously awaited news on the new head of the U.S. central bank while strong share markets and a calmer geopolitical environment sapped safe-haven demand.

“The hawkish speculation about a new Fed chair has added some downside pressure,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

President Donald Trump told reporters on Monday he is “very, very close” to making his decision on who should chair the U.S. Federal Reserve.

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