The Daily Market Report: Gold Gives Back Earlier Gains on Firmer U.S. Data
23-Jul (USAGOLD) — Gold popped back above the $1100 level in overseas trading, buoyed by a softer dollar. While price action remains confined to the broad range that was established during Monday’s volatile session, the yellow metal retreated during early U.S. trading on some better than expected economic data.
The gold market is trying to regain some traction in the wake of Monday’s paper-market rout. Pysical buyers are the ones providing that traction. U.S. Mint data shows demand for bullion coins in the U.S. is running at more than a two-year high.
With more than a week still to go until the end of the month, sales of U.S. Mint American Eagle gold coins have vaulted above 110,000 ounces so far this month, the highest monthly tally since April 2013, when the historic selloff in bullion unleashed a surge in pent-up demand, ending a decade-long run-up in prices.
The total is also well above the 76,000 ounces sold in June and more than five times the 21,500 ounces sold in May, government data showed. — via Reuters
U.S. initial jobless claims fell last week to 255k, a 42-year low. Volatility in the jobs market this month is being attributed to holiday and auto retooling distortions. It may also be that the U.S. jobs market has sort of stabilized within the post-great-recession malaise: Workers with jobs are clinging to them. Workforce participation has dropped significantly. Many are under-employed, stuck in temp and part-time positions.
Nonetheless, the financial press seemed to really love that number. Additionally, U.S. LEI beat expectations as well, which will undoubtedly boost the confidence of policy hawks calling for a rate hike this year. U.S. rate dutifully edged higher, and the dollar regained some of its earlier losses.
The U.S. Geological Survey reported that U.S. gold production was down 9% y/y in March, suggesting that softer gold prices this year may be starting to take their toll on mining output. Given the subsequent price activity, I would’t be surprised to see further drops in production. Tightening supply should be supportive to the price.
The U.S. Mint is now expected to resume silver Eagle shipments next week, but on an allocated basis. The Mint ran out of silver Eagles back on July 7, when demand soared in June and into the first week of July.
Our buyers had the foresight to secure a large volume of Silver Eagles before the mint ran out. We continue to sell out of inventory at a premium that is significantly below many other dealers.
