Gold tries to add to recent gains as dollar eases, stocks steady

MarketWatch/Rachel Koning Beals/05-22-17

Gold prices firmed Monday, looking to add to the their largest weekly gain since mid-April, as declines in the U.S. dollar index and a modest rise in equities helped to support bids for precious metals.

…Gold scored a roughly 2.1% advance for last week, a trading stretch marked by rising volatility and political unrest in the White House. That was the largest such gain since the week ended April 13. The yellow metal has climbed in seven of the past eight sessions.

Still, “rhetoric suggesting the central bank remains on track to raise rates next month despite recent U.S. political jitters may weigh on gold” as the week goes on, said Ilya Spivak, currency and commodities strategist with Daily FX.

Posted in Gold News, Gold Views |

Gold regains sheen on global cues, jewellers’ buying

Times of India/05-22-17

Marketmen said a firm trend overseas, as recent political events in the US continued to weigh on the greenback and boost demand for safe-have assets, coupled with pick up in buying by local jewellers at domestic spot markets led to the recovery in gold prices.

Posted in Gold News, Gold Views |

Morning Snapshot: Gold firms and dollar continues to slide

USAGOLD/Peter Grant/05-22-17

Gold is edging higher, buoyed by new 6-month lows in the dollar index. Silver has regained the 17 handle, rising more than 1% to set new 2-week highs.

The euro jumped in overseas trading after Angela Merkel said the German trade surplus was so high because the “the euro is too weak.” She laid this at the feet of the ECB, which may lend some gravity to speculation about initial moves toward policy normalization later in the year.

The Chicago Fed National Activity Index rose to 0.49 in April, versus a negative revised 0.07 in March. That’s about it today, besides a full raft of FedSpeak from Harker, Kashkari, Brainard and Evans.

Posted in Gold News, Gold Views, Snapshot |

Euro extends gains to hit fresh 6-month high against US dollar

FT/Mamta Badkar/05-22-17

The euro climbed to a fresh six-month high on Monday as the currency rebounded against the US dollar.

…The moves came after Angela Merkel, the German chancellor, told school students in Berlin that “the euro is too weak”, which she attributed to European Central Bank policy.

“The context she was saying this in was in her description over why Germany has such a high trade surplus but the euro moved anyway,” said Peter Boockvar, chief market analyst at The Lindsey Group.

Posted in U.S. Dollar |

Gold higher a5 1258.79 (+3.51). Silver 17.09 (+0.205). Dollar lower. Euro higher. Stocks called higher. U.S. 10-year 2.24% (+1 bp).

Posted in Markets |

The Daily Market Report: Both Technicals and Fundamentals Remain Supportive for Gold

USAGOLD/Peter Grant/05-19-17

The dominant trend in the gold market remains positive, despite the recent multi-week pullback. The yellow metal appears poised to end the week with a 1.8% gain, the biggest in more than a month.

The technical picture remains constructive with gold holding above key moving averages. The 50-day MA remains above the 200-day MA, sustaining the “golden-cross” that occurred late last week. When the 50-day moves above the 200-day moving average, it is typically interpreted as a rather bullish event, hence the name.

Gold is proving quite resilient today in the face of a rebounding stock market. Stocks were lifted by dovish FedSpeak, but heightened political and geopolitical risks are likely to continue underpinning the yellow metal.

St. Louis Fed President James Bullard acknowledged that both growth and inflation data have been pretty soft of late. “FOMC’s contemplated policy rate path is overly aggressive relative to actual incoming data on U.S. macroeconomic performance,” said Bullard.

I have maintained that the primary goals of the Fed’s tightening into weak growth, is to prick the stop market bubble and to replenish the central bank’s ammunition in case of more pronounced growth risks and/or deflationary pressures. Minneapolis Fed President Neel Kashkari warned this week that, “Monetary policy should be used only as a last resort to address asset prices, because the costs to the economy of such a policy response are potentially so large.”

So what is the Fed to do at the June 13-14 FOMC meeting, given still relatively buoyant stocks and the worsening risk that the economy stumbles in the face of the considerable headwinds now facing President Trump’s fiscal policy agenda? Rate hike expectations have ebbed recently, but there’s still several weeks to go before the FOMC convenes.

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

Gold Set for Best Week Amid Geopolitical Turmoil


In today’s “Futures in Focus,” Phil Streible of RJO Futures discusses the outlook for oil markets and gold. He speaks with Mark Barton on “Bloomberg Markets.”

“Gold looks fantastic at these levels.” — Phil Streible
“Gold/silver ratio at 74 right now, that’s historically on the high end of things. I think it will come back down in the 60s…I think silver could be your next move.” — Phil Streible
Posted in Gold News, Gold Views |

The Fed may be pushing for interest-rate hikes for the wrong reasons

BusinessInsider/Pedro Nicolaci da Costa/05-19-17

The central bank’s mandate is low, stable inflation and maximum employment, and Fed officials monitor a range of indicators to assess progress on those two goals.

But the Fed may be keen to hike rates for another reason: reigning in what it sees as excessively high prices in stocks and other financial markets.

If that’s its intention, it goes against what Fed Chair Janet Yellen and other key members of the rate-setting Federal Open Market Committee have said they would do.

… Neel Kashkari, the Minneapolis Fed president who is seemingly the last true remaining dove at the central bank, however, makes a solid case in an essay this week as to why this is a terrible idea. Here are his bullet points on the Fed’s limitations from the essay:

1. It is really hard to spot bubbles with any confidence before they burst.

2. The Fed has limited policy tools to stop a bubble from growing, even if we thought we spotted one.

3. The costs of making policy mistakes can be very high, so we must proceed with caution.

4. What we can and must do is ensure that the financial system is strong enough to withstand the inevitable bursting of a bubble.

5. Monetary policy should be used only as a last resort to address asset prices, because the costs to the economy of such a policy response are potentially so large.

Posted in Central Banks, Markets, Monetary Policy |

Eurozone consumer confidence hits decade high

FT/Mehreen Khan/05-19-17

The good times are back in the eurozone.

A measure of consumer confidence has hit a pre-financial crisis peak this month, reaching its best level in a a decade as the continent has shrugged off populist political risks in 2017.

The European Commission’s monthly sentiment gauge gained 0.3 points to hit -3.3 in May – its best level since July 2007.

PG View: Aside from the negative number itself, this article fails to mention that consumer confidence hasn’t been positive since the euro launched nearly 20-years ago.


Posted in Economy, Europe |

St. Louis Fed’s Bullard: FOMC’s contemplated policy rate path is overly aggressive

St. Louis Fed/James Bullard/05-19-17

• On balance, the U.S. macroeconomic data have been relatively weak since the March FOMC meeting.
• U.S. inflation and inflation expectations have surprised to the downside in recent months.
• Labor market improvement has slowed over the last two years.
• Low unemployment readings are probably not an indicator of meaningfully higher inflation over the forecast horizon.

• Real GDP growth measured from one year earlier has averaged just 2.1 percent over the last seven years.
• The last two years have shown very little change in year-over-year real GDP growth.
o 2015-Q4: 1.9 percent; 2016-Q4: 2.0 percent.
• A natural conclusion is that the economy has converged upon a growth rate of about 2 percent.
• Is the U.S. economy likely to move meaningfully off of this trend in 2017?
o The short answer is no.

• Financial market readings since the March decision have moved in the opposite direction:
o longer-term yields have declined,
o inflation expectations have weakened, and
o market expectations of the policy rate path have declined.
• This may suggest that the FOMC’s contemplated policy rate path is overly aggressive relative to actual incoming data on U.S. macroeconomic performance.

Posted in Central Banks, Monetary Policy |

US airstrikes in Syria ‘completely unacceptable’, Russia says


US airstrikes targeting pro-Assad forces close to the Iraqi border have been branded “completely unacceptable” by Russia.

Coalition warplanes targeted a convoy of Syrian government forces and Iranian-backed militia close to the Iraq border on Thursday.

The action was to protect British and American special forces based in al Tanf, southeast Syria.

Posted in Geopolitical Risks |

Morning Snapshot: Gold recovers from overseas losses as focus remains on political and geopolitical tensions

USAGOLD/Peter Grant/05-19-17

Gold is trading modestly higher after failing to sustain overseas losses. The yellow metal initially dipped to 1245.10 as the dollar staged a rebound, but the gains in the greenback could not be sustained.

Today’s U.S. calendar is empty, so focus will remain squarely on U.S. political turmoil, which is threatening to derail President Trump’s reflation agenda. In the absence of promised fiscal stimulus, the U.S. economy will likely remain confined to tepid growth and perhaps sets the stage for recession.

This will raise doubts at the Fed, as to their next policy move. Continued rate hikes into weak growth certainly heightens the likelihood of recession. How close to the tipping point is the Fed willing to go?

Geopolitical tensions are heightened today as well after U.S. warplanes attacked a pro-Assad military convoy. Both Syria and Russia have condemned the attack. Reports suggest that there may have been Iranian embedded with the Syrians as well.

Posted in Gold News, Gold Views, Snapshot |

Gold higher at 1253.56 (+4.25). Silver 16.85 (+0.183). Dollar lower. Euro lower. Stocks called higher. U.S. 10-year 2.24% (+1 bp).

Posted in Markets |

The Daily Market Report: Gold Retreats Modestly From 2-Week Highs

USAGOLD/Peter Grant/05-18-18

Gold has turned modestly defensive intraday following a round of positive U.S. economic data that buoyed stocks. However, the shadow of U.S. political uncertainty continues to hold sway on markets.

The yellow metal remains above the 200-day moving average and more than 61.8% of the entire decline from 1295.03 to 1213.60 has been retraced. This presents a generally favorable technical picture, which bodes well for the underlying uptrend that emerged in the wake of last December’s Fed rate hike.

With new accusations against the Trump administration surfacing on a daily basis, the President’s economic agenda may be severely hamstrung. They will be spending an inordinate amount of time and energy defending themselves, rather than advancing key legislation.

The dollar has already retraced all of its post-election gains. It is not unreasonable to think stocks may suffer the same fate. That would equate with about another 13% decline in the DJIA from the present level.

As doubts about fiscal stimulus and tax reform grow, Fed rate hike expectations have steadily eroded. The CME’s FedWatch tool now puts the probability of a 25 bps hike in June at 64.6%.

Even as growth risks mount, the Fed announced yesterday that household debt grew to a record high of $12.73 trillion in Q1. The previous high was established in Q3-08, just as Lehman Brothers collapsed and the financial crisis really gained momentum.

At its core, the financial crisis was a debt crisis. Policymakers the world-over — and seemingly U.S. households as well — opted to paper over the crisis with more debt. When the next crisis erupts, I’m not so sure the policymakers will be able to pull us back from the brink because the debt loads are so significantly higher than they were in 2007-2008.

Be prepared. Buy gold.

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

Trump scandals threaten GOP agenda

Politico/Nancy Cook & Burgess Everett/05-18-17

Republicans’ long-held dreams of tweaking Medicaid, repealing Obamacare and overhauling the tax code appear in more jeopardy than ever as scandal and investigations beset President Donald Trump’s White House.

Some Republicans fear that subpoenas and congressional inquiries will swamp the time they need to pass a health care or tax bill in 2017 — not to mention renegotiate NAFTA, unify behind a $1 trillion infrastructure plan or build that border wall.

“Everything affects our work right now. The more controversy we have the more difficult it is to do things,” said Senate Finance Chairman Orrin Hatch (R-Utah). “But this place is filled with controversy, so if you don’t understand that, you’re in the wrong job.”

Posted in Economy, Politics |

Gold edges lower after biggest rally since Brexit vote

Reuters/Jan Harvey/05-18-17

Gold eased on Thursday as a bounce in the dollar prompted some buyers to cash in gains after its biggest one-day rally in nearly a year, though uncertainty over the outlook for the Trump presidency underpinned the metal near two-week highs.

Gold surged nearly 2 percent on Wednesday, its biggest one-day jump since Britain’s June vote to leave the European Union, on reports that U.S. President Donald Trump had tried to intervene in an investigation into alleged Russian interference in last year’s U.S. election.

…”(Gold) is seeing a pullback after yesterday’s strong performance — it needs to take a breather,” said Heraeus precious metals trader Alexander Zumpfe. “It ran into resistance towards $1,260.”

PG View: Stocks recouped much of this morning’s follow-on losses after a round of generally favorable U.S. economic data, weighing on gold.

Posted in Gold News, Gold Views |

U.S. leading indicators +0.3% in Apr, in line with expectations, vs +0.3% in Mar.

Posted in Economic Data |

Gold’s Haven Status Refreshed as Trump’s Turmoil Wounds Stocks

Bloomberg/Ranjeetha Pakiam/05-18-17

Gold traded near a two-week high as the disarray engulfing Donald Trump’s White House boosted the commodity’s allure as a haven, with equities in retreat and investors scaling back the odds of the Federal Reserve tightening policy next month. Other precious metals fell.

…Gold is benefiting as Trump faces the biggest crisis of his presidency after a series of damaging revelations, including reports he pressed FBI Director James Comey to drop a probe into former National Security Adviser Michael Flynn. As the potential implications of the claims reverberated through Washington, equities sank and the dollar traded near the lowest since November. While the White House has denied Comey’s version, there’s concern the administration won’t now be able to implement its economic agenda.

“People are now worried that he may get impeached,” said Brian Lan, managing director of Singapore-based GoldSilver Central Pte, referring to Trump. “So safe-haven assets are now back in.”

Posted in Gold News, Gold Views |

Morning Snapshot: Gold remains generally well bid amid political turmoil

USAGOLD/Peter Grant/05-18-17

Gold remains generally well bid in the wake of yesterday’s solid gains. The yellow metal remains underpinned by haven demand amid ongoing U.S. political turmoil.

Stocks extended to the downside in pre-market trading, adding to Wednesday’s considerable losses as risk appetite continues to wane. As BusinessInsider’s Pedro da Costa put it, “the challenge to Trump’s political power has reached a level that means his economic agenda is off the rails.” That would suggest that the balance of the post-election stock market gains are vulnerable to retracement.

This morning’s U.S. data were generally constructive. Initial jobless claims for last week dropped 4k to 232k, below expectations of 240k. The Philly Fed index rose to 38.8 in May, beating expectations of 19.5 by a wide margin. Later this morning we’ll see leading indicators for April. A rise of 0.3% is expected.

Posted in Gold News, Gold Views, Snapshot |

U.S. Philly Fed index rose to 38.8 in May, well above expectations of 19.5, vs 22.0 in Apr.

Posted in Economic Data |

U.S. initial jobless claims -4k to 232k in the week ended 13-May, below expectations of 240k.

Posted in Economic Data |

Gold steady at 1260.00 (-0.42). Silver 16.74 (-0.194). Dollar better. Euro lower. Stocks called lower. U.S. 10-year 2.20% (-2 bps).

Posted in Markets |

Dow finishes down 370 points, dollar hammered, gold surges $17. . . . .

Surprise! Gold up almost 9% on the year.

Posted in all posts |

Paper Vs. Physical: The Amazing Amount Of Leverage In The Silver Market

ZeroHedge/Steve St.Angelo/05-17-17

While many precious metals investors realize the massive amount of paper trading leverage taking place in the gold market, they should see what is going on in the silver market. In a previous article, I provided data showing that an amazing $9.8 trillion of notional gold paper trading took place on the world’s exchanges in 2016 versus $42 billion in actual physical gold investment. This was a paper to physical ratio of 233 to 1.

However, the amount of paper trading leverage in the silver market is much higher than that.

… the paper notional silver trading ratio to physical silver investment was a whopping 517 to 1… double the 233/1 for gold.

PG View: You know the old adage: An ounce of silver in the hand is worth 517 in the bush . . .

Don’t settle for a paper or digital representation of gold or silver, only buy the real thing and take possession.

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

The dollar has erased nearly all its post-election gains

BusinessInsider/Elena Holodny/05-17-17

The US dollar index is down by 0.2% at 97.890 as of 9:46 a.m. ET on Wednesday.

That brings the dollar back to roughly where it was just before the US presidential election. The index closed at 97.861 on November 8, the day of the election, according to Bloomberg data.

Analysts have suggested that the currency is suffering from the tumult of news coming out of the embattled Trump administration in the wake of the firing of FBI Director Jim Comey and bombshell reports that the president shared classified information with Russian Foreign Minister Sergey Lavrov and Ambassador Sergey Kislyak.

In particular, markets may be worried that the recent developments could stall the economically stimulative tax and infrastructure policies many investors hoped for after the election.

PG View: Are stocks destined to retrace their gains since November as well?

Posted in U.S. Dollar |

Gold is surging

BusinessInsider/Bob Bryan/05-17-17

The price of gold is surging after political uncertainty appears to have pushed investors into safe-haven assets on Wednesday.

The precious metal was trading at $1,258.50 an ounce as of 11:25 a.m. ET, a $22.10, or 1.79%, jump on the day.

This is the largest move for gold since March 16, when the metal leapt as much as 2.77% intraday.

PG View: Gold’s gains are coming amid risk aversion stemming from heightened political uncertainty.

Posted in Gold News, Gold Views |

Household debt just surpassed the record level reached during the 2008 financial crisis

CNBC/Steve Liesman/05-17-17

The New York Federal Reserve reports that household debt across the nation has hit a dubious milestone in the first quarter: It surpassed the peak debt level of 2008 at $12.7 trillion.

…Credit-card delinquencies crept up and student-loan delinquencies remain stubbornly high in the low double digits. Delinquencies in the $1.2 trillion auto-loan market were down a bit, but they bear watching after a steady rise since 2012.

Posted in Debt |

The Daily Market Report: Gold Surges on Haven Appeal

USAGOLD/Peter Grant/05-17-17

Gold surged back above the 1250 level, as rising political uncertainty threaten to completely derail President Trump’s economic agenda. Stocks are under pressure today as investors retreat from risk assets in favor of safe-havens, such as gold.

“If special prosecutors are hired or there is more talk about obstruction of justice being an impeachable offense, one can kiss the tax plan, health care plan, and fiscal stimulus plan goodbye for 2017,” said Andy Brenner, of National Alliance Securities in a note reported on by CNBC. One might then argue that all of the post-election gains in the stock market are vulnerable to retracement. That would be about a 13% retreat from present levels.

The dollar index has already retraced nearly all of its gains since November. Without a fiscal boost, the U.S. economy is likely to remain mired its current slow growth mode and could conceivably tip into a long overdue recession. That in turn could prompt the Fed to reevaluate the gradual tightening of monetary policy.

Since WWII, recessions have occurred about every six-years. It has been about eight-years since the Great Recession ended. We’re due.

If a recession does indeed occur, the central bank only has 100 bps of clearance above the zero-bound. At Jackson Hole last year, Janet Yellen acknowledged that that the Fed responded to the last nine recessions by cutting the federal funds rate “by amounts ranging from about 3 percentage points to more than 10 percentage points.”

Even the minimum would take Fed funds deep into negative territory! And with the Fed’s balance sheet already in excess of $4 trillion, would they dare to start buying assets again?

My guess is that both negative rates and more QE would have to be considered because they are the only tools available. However, the long-term consequences could be dire.

Gold remains the preferred safe-haven in such scenarios. While the yellow metal has regained considerable ground this week, it remains arguably undervalued relative to the degree of economic, political and geopolitical uncertainty.

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

Republicans may be reaching their breaking point with Trump

Politico/John Bresnahan & Rachael Bade/05-16-17

…Republicans are privately beginning to worry that they may one day have to sit in judgment of Trump, or that more damaging information from Comey could force the president to step down.

…More Republicans have openly discussed the possibility of a select committee or the appointment of a special prosecutor to look into the Trump-Russia connection. It’s still a minority of GOP lawmakers, but Republican leaders are watching closely.

…And if Republicans are paralyzed and can’t pass anything despite control of the White House and Congress, how can they justify their majorities when they go before voters next year?

PG View: Whether the accusations are true or not, they provide a monumental headwind to anything the President was hoping to accomplish.

Posted in Politics |

Dow drops 250 points, S&P and Nasdaq fall 1% as Trump worries send shivers down Wall Street

CNBC/Fred Imbert/5-17-2017

“This is clearly Washington-driven,” said Michael Shaoul, chairman and CEO of Marketfield Asset Management. “It’s a lot like 1998-99, when the market had to deal with the [Monica] Lewinsky scandal.”

MK note:  Unravelling euphoria + deflating bubble = Gold up $15.

Posted in all posts |