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AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.


7/16/2019: Gold dips on retailing data

Source: Bill Musgrave, American Gold Exchange

Austin — Gold dipped 0.2% to close under $1,412 after upbeat US retail sales data helped to lift the dollar, undercutting demand for alternative stores of value.

Sales at US retailers rose 0.4% in June, beating forecasts and assuaging some fears that the economy is sliding toward recession. It was the fourth straight month of stronger consumer spending, which constitutes roughly 70% of GDP.

The dollar picked up 0.4% against major rivals, helped by the retailing data and weakness in the euro and pound. Eurozone data pointing to sharply lower German investor confidence pressured the euro, while the pound fell to six-month lows on rising Brexit worries as conservative candidates for Prime Minister struck a harder line about negotiations with the EU.

The Federal Reserve reported the US factory sector declined again in the second quarter, with manufacturing falling 2.2%. Meanwhile, import prices fell in June by the most in 6 months because of lower oil prices and slowing global growth.

Despite the uptick in retail sales, the odds of a half-point rate cut from the Fed this month increased to 34% today, up from 29% yesterday and 3% a week ago. The odds of at least a quarter-point cut remain 100%, according to Fed-fund futures trading. Falling rates support higher gold prices by pressuring the dollar.

The other precious metals were mostly higher, with silver and platinum rising 2% and 0.2%, respectively, while palladium fell 3%.

At the Comex close: August gold dipped $2.30 to $1,411.20; September silver rose 31 cents to $15.68; October platinum added $1.70, to $846.90; and September palladium lost $46.60 to $1,516.30 an ounce.


7/15/2019: Gold edges up on rate view

Source: Bill Musgrave, American Gold Exchange

Austin — Extending last week's rise of nearly 1%, gold added another 0.1% to close at $1,413.50 despite falling oil and a slightly higher dollar. It was the metal's highest finish in nearly two weeks, buoyed by expectations that the Fed will cut interest rates this month.

West Texas Intermediate crude fell 0.8% to close under $60 per barrel after the impact of Hurricane Barry on Gulf Coast production was less harmful than feared. Oil jumped 4.7% higher last week behind storm worries, OPEC production caps, and growing tension between the US and Iran. Gold often trade in sympathy with oil as a hedge against energy-related inflation.

The dollar edged up less than 0.1% despite weakness in the euro, its primary rival, as forex markets tread water ahead of upcoming central bank meetings. The ECB is widely expected to signal a small reduction in interest rates when it meets later this month, while the Fed is universally expected to cut rates by at least a quarter-point.

Lower benchmark rates from central banks tend to undermine their currencies by making them less attractive to investors seeking higher yield. Alternative stores of value like gold and silver become more attractive, in turn, as hedges against currency devaluation.

The other precious metals were also higher, with silver rising 0.9% while platinum and palladium each gained 1.3%.

At the Comex close: August gold picked up $1.30 to $1,413.50; September silver climbed 13 cents to $15.37; October platinum added $10.60, to $845.20; and September palladium rose $20.50 to $1,562.90 an ounce.


7/12/2019: Gold rallies for the day and week

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.4% to close above $1,412 as soft wholesale inflation pressured the dollar and boosted alternative stores of value. The metal finished the week 0.9% higher, spurred by a dovish rate view from the Fed.

The Producer Price Index rose a scant 0.1% in June, with an uptick in the cost of services largely offset by falling energy prices. The 12-month rate of wholesale inflation fell to 1.7%, the weakest since January 2017. Tame inflation gives the Fed additional leeway to reduce interest rates.

While the core Consumer Price Index rose 0.3% in June, as reported yesterday, the Fed's preferred gauge of consumer inflation, the so-called core PCE index, remains stuck at 1.6% year-over year, well under the 2% target.

The dollar slipped for the third straight session as speculation builds that the Fed will cut rates later this month. Fed Chair Jerome Powell all but committed to lower rates during this week's testimony on monetary policy before Congress. Focusing on the "uncertainties" facing the US outlook including trade conflicts and slowing global growth, Powell promised to "act appropriately" to "sustain the expansion."

Powell's increasingly dovish outlook was reinforced by the midweek release of the minutes from the Fed's June meeting. Committee members admitted they were caught off-guard by the recent barrage of weak US economic data, and "many" said they were prepared to cut interest rates if weakness persists.

Lower interest rates typically weaken the dollar by making it less attractive to foreign exchange investors seeking higher yield. A falling dollar, in turn, supports gold and other commodities priced in it for global trade by making them less expensive overseas.

The other precious metals were mixed for the day and week. Silver rose 0.6% today and 1.6% this week. Platinum gained 0.5% for a weekly rise of 2.9%. Palladium fell 1.1% on the day and 1.4% on the week.

At the Comex close: August gold gained $5.50 to $1,412.20; September silver rose 9 cents to $15.24; October platinum picked up $3.70 to $834.60; and September palladium fell $16.70 to $1,542.40 an ounce.


7/11/2019: Gold slides on CPI uptick

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slid 0.4% to close under $1,407 after an uptick in core consumer inflation tempered expectations for an aggressive rate cut from the Federal Reserve. The metal had traded as high as $1,429 earlier in the session before receding on profit-taking.

Consumer inflation rose in June, with the CPI picking up 0.1%. Prices rose for consumer staples, rent, autos, and health care, among others, while falling for gas, electricity, and natural gas. The so-called core rate, stripping out food and energy, rose more aggressively at 0.3%, while the 12-month rate edged up to 2.1%.

While mild, the inflation reading was stronger than forecast, causing traders to rethink expectations for the July Fed meeting. Following yesterday's dovish statements from Fed Chair Jerome Powell, Fed-funds futures trading showed the odds of a half-point reduction in interest rates jumped from 3% to 30%, pressuring the dollar and helping gold rise to a one-week high.

Today, the likelihood of that hefty cut pulled back to 16%, according to CME FedWatch, prompting traders to take profit from gold's Fed-inspired rally. The odds of at least a quarter-point cut remain at 100%. Lower rates support gold by pressuring the dollar, making the metal less expensive in other currencies.

The other precious metals were mostly lower, with silver and palladium dropping 0.5% and 1.8%, respectively, while platinum added 0.1%.

At the Comex close: August gold slid $5.80 to $1,406.70; September silver dropped 8 cents to $15.15; October platinum added 90 cents, to $830.90; and September palladium fell $29 to $1,559.10 an ounce.


7/10/2019: Gold jumps on dovish Fed

Source: Bill Musgrave, American Gold Exchange

Austin — Gold jumped to a one-week high, rising 0.9% to close above $1,412, after Fed Chair Jerome Powell's dovish testimony before Congress weakened the dollar, boosting demand for alternative stores of value.

The metal extended its gains after hours, climbing as high as $1,419.50 in electronic trade after the minutes from the Fed's June meeting underscored its willingness to cut interests rates.

In prepared remarks, Powell told Congress that slowing global growth, weak inflation, falling business investment, and uncertainty about trade wars "continue to weigh" on the US economy. He emphasized that the central bank will monitor developments and "act appropriately to sustain the expansion."

Traders took the statement to mean the Fed will deliver its first interest rate reduction in 10 years when it meets later this month, with the only question being the size. The odds of a half-point cut leapt from 3% to 29% after Powell's testimony, based on Fed-fund futures trading. The likelihood of at least a quarter-point reduction rose from 95% to 100%.

Lower rates are bullish for gold because they weaken the dollar by making it less attractive to foreign exchange investors seeking higher yield. They also reduce the opportunity cost of holding the metal, which generates no yield itself.

The minutes from the Fed's June meeting, released after the Comex close, reinforced the Chair's dovish stand. "Many" members, caught off-guard by deepening weakness in the economy, said they are ready to reduce interest rates if the soft data persists.

The dollar fell 0.4% against major rivals on the revised rate outlook, lifting gold and other commodities priced in it for global trade by making them less expensive overseas.

Also supporting gold, oil prices rose for a fifth session, with WTI crude soaring more than 4% after government data showed US inventories fell by 10 million barrels. Tensions with Iran and extended production cuts by OPEC are also fueling higher prices. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were also higher, with silver rising 0.5% while platinum and palladium climbed 1.8% and 3.1%, respectively.

At the Comex close: August gold gained $12 to $1,412.50; September silver picked up 8 cents to $15.23; October platinum climbed $14.90 to $830; and September palladium surged $48.20 to $1,588.10 an ounce, a new record.


7/9/2019: Gold edges up with oil rally

Source: Bill Musgrave, American Gold Exchange

Austin — Gold inched 50 cents higher to close at $1,400.50 after an uptick in the dollar hampered interest in alternative stores of value despite a rally in oil prices.

With the markets largely treading water ahead of tomorrow's testimony on monetary policy before Congress by Jerome Powell, the dollar picked up 0.1% against major rivals to hit a 3-week high, boosted in part by bets that Fed Chair will be less dovish than previously expected. A rising dollar tends to pressure gold and other commodities priced in it for global trade by making them more expensive overseas.

For weeks, traders have been expecting the Fed to cut rates aggressively at the July meeting to offset slowing US and global growth. But Last Friday's stronger-than-forecast payrolls report, which showed 224,000 jobs added in June, changed the calculus on rates. While a quarter-point rate cut remains widely anticipated, the odds of a half-point reduction have fallen dramatically, according to Fed-fund futures trading.

Powell's testimony this week will be scoured for clues on how much, if at all, the Fed will reduce its benchmark lending rate. A bigger cut would pressure the dollar, boosting gold in turn.

Crude oil rose 1.3% as ongoing Middle East conflict and OPEC production cuts fueled concerns about global supplies. Saber-rattling between the US and Iran over uranium enrichment and tanker sabotage in the Gulf of Hormuz has kept tensions high for weeks in the volatile region. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The World Gold Council reported today that holdings in gold-back ETFs rose by 15% in June, the most in 7 years. Geopolitical uncertainty and increasingly dovish signals from global central banks have fueled the increase in gold investing as a safe-haven hedge.

The other precious metals were mixed, with silver rising 0.6% while platinum and palladium fell 0.7% and 1.2%, respectively.

At the Comex close August gold added 50 cents, to $1,400.50; September silver added a dime, to $15.15; October platinum slid $5.30 to $815.10; and September palladium dropped $18.30 to $1,539.90 an ounce.


7/8/2019: Gold near-flat ahead of Powell

Source: Bill Musgrave, American Gold Exchange

Austin — Gold was nearly flat, dipping a dime to close at $1,400, as traders awaited this week's testimony before Congress by Jerome Powell, hoping for clues about the direction of interest rates.

Slowing growth, moribund inflation, and persistent trade tensions in recent months have led to the widespread expectation that the Federal Reserve will lower interest rates later this month, perhaps by a half-point.

Friday's robust payrolls report has complicated the outlook, however. US nonfarm payrolls added 224,000 new jobs in June, rebounding strongly from May's 72,000 and suggesting that the economy may be regaining its footing after a lull.

Suddenly, a deep rate cut no longer seems like a sure thing as the Fed Chair begins two days of briefing lawmakers on monetary policy on Wednesday. While trading in Fed-fund futures places the odds of a quarter-point reduction at 94%, the likelihood of half-point cut has dropped to 6% from 20% a week ago. A deeper cut would weaken the dollar by discouraging foreign exchange investors seeking higher yield, boosting gold and other commodities in tun by making them less expensive overseas.

The dollar edged slightly higher against major rivals, hovering around a three-week high on the shifting rate outlook.

Gold's slip was backstopped by safe-haven bids caused by falling US equities and rising Middle East tensions. The S&P 500 and Dow each fell 0.4% on the prospect of a smaller rate cut. Meanwhile, Iran threatened to accelerate the enrichment of uranium, a move that could court further confrontation with the US.

The other precious metals were mixed, with silver and platinum rising 0.3% and 1.1%, respectively, while palladium dropped 0.4%.

At the Comex close: August gold dipped 10 cents to $1,400; September silver added a nickel, $15.05; October platinum rose $9 to $820.40; and September palladium lost $6 to $1,558.20 an ounce.


7/5/2019: Gold falls on payrolls, rate view

Source: Bill Musgrave, American Gold Exchange

Austin — Gold fell 1.5% but held above $1,400 as robust jobs data eased recession worries and boosted the dollar, dulling demand for alternative store of value. The metal ended the holiday-shortened week down 1% after closing at a 6-year high above $1,420 yesterday.

US nonfarm payrolls added 224,000 jobs in June, well above forecasts and far more than May's meager 72,000. The unemployment rate ticked up from 3.6% to 3.7% while 12-month wage growth remained unchanged at 3.1%.

The rebound in hiring helped to quell immediate fears that the 10-year economic expansion might be grinding to halt. Escalating trade tensions have punished manufacturing and business investment. And while consumer spending remains relatively solid, the crucial services sector slid to a 2-year low last month, according to the ISM. The Atlanta Fed projects GDP growth in the second quarter has slowed to just 1.3% from 2.8% in Q1.

Against this backdrop, traders were hoping the Fed would deliver a half-point reduction in interest rates when it meets at the end of July. Today's strong payrolls report tempers that expectation. CME FedWatch has lowered the chances of a half-point cut to 5%, down from nearly 30% yesterday, based on Fed-fund futures trading. But a quarter-point cut remains almost universally anticipated, with FedWatch placing the odds at 95%.

The dollar rose 0.6% to more than a two-week high on the shift in Fed rate view. A deeper rate cut would weaken the dollar by making it less attractive to foreign exchange investors seeking higher yield. A stronger dollar pressures gold and other commodities priced in it for global trade by making them more expensive overseas.

Wall Street also slid on the revised rate expectations, with the S&P 500 and Dow dropping 0.2% each. Warnings of a recession in corporate earnings further damaged risk appetite. With the unofficial start of Q2 earnings season two weeks away, the number of S&P 500 companies forecasting a decline in profits rose to the highest level in 13 years, according to MarketWatch.

The other precious metals were down for the day and mixed for the week. Silver fell 2.2% on the day and week. Platinum tumbled 3.8% for a weekly loss of 3.5%. Palladium edged down 0.1% but still gained 1.7% this week.

At the Comex close: August gold fell $20.80 to $1,400.10; September silver lost 34 cents to $15; October platinum lost $32.20 to $811.40; and September palladium dipped $1.60 to $1,564.20 an ounce.


7/3/2019: Gold rises to new 6-year high

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.9% to close at a 6-year high near $1,421 after another round of soft US data boosted expectations that the Federal Reserve will cut interest rates this month. The metal traded as high as $1,441 earlier in the day before easing back on profit-taking.

Two gauges of the services sector showed the economy continuing to lose momentum in June. The ISM nonmanufacturing index fell to the lowest level in 2 years, and the Markit services PMI hovered near a 39-month low. Including industries like finance, food service, health care, and retailing, the services sector comprises around 70% of GDP.

The manufacturing sector is faring no better. The Commerce Department reported factory orders fell 0.7% in June, while the ISM manufacturing index dropped to a 2-year low.

Private-sector job creation was weak for a second month, with ADP reporting just 102,000 positions added in June. While better than May's revised 41,000, the total fell short of forecasts and far below the monthly average of 211,000 jobs from February through April.

The latest round of subpar data reinforced expectations that the Fed will cut rates, perhaps by a half-point, at its July meeting. Lower rates are bullish for gold, in part, because they weaken the dollar, which makes the metal less expensive overseas, thereby spurring global demand. Investors are attracted to gold as a hedge against currency devaluation and inflation.

Adding to easy-money expectations, President Trump has nominated a pair of dovish economists, Christopher Waller and Judy Shelton, to join the Fed's Board of Governors. Both have advocated aggressively for lower interest rates. And IMF director Christine Lagarde has been nominated to replace Mario Draghi as head of the European Central Bank. Lagarde has long been a proponent of monetary easing.

The other precious metals were also higher, with silver adding 0.6% while platinum and palladium rose 1.2% and 0.8%, respectively.

At the Comex close: August gold gained $12.90 to $1,420.90; September silver added dime, to $15.34; October platinum climbed $10.10 to $843.60; and September palladium picked up $13 to $1,565.80 an ounce, a new record.


7/2/2019: Gold surges on growth worries

Source: Bill Musgrave, American Gold Exchange

Austin — Gold surged 1.4% to close at $1,408 as slowing global growth and renewed trade-war tensions with Europe eroded risk appetite, boosting demand for safe-haven assets.

Morgan Stanley released data today showing global manufacturing is shrinking for the first time since 2016. Separately, JPMorgan's index of worldwide industrial output fell into contraction for the second straight month, dropping to the lowest level in seven years.

The data follows weak factory reports from the world's two largest economies. Caixin China's PMI for manufacturing fell into contraction in June, hammered by its ongoing trade war with the U.S. Meanwhile, the ISM showed U.S. manufacturing grew in June at the slowest pace in three years, also because of trade tensions.

Meanwhile, one day after calming markets with news that negotiations will resume with China, the White House intensified its trade war with Europe, threatening new tariffs on an additional $4 billion in goods from the European Union.

Benchmark 10-year Treasury yields fell sharply, hovering around a 30-month low as investors sought safety. Yields on British government bonds also plunged after the Bank of England raised concerns that trade tensions and a no-deal Brexit could heavily damage the global economy.

The dollar slipped 0.2% from a two-week high, supporting gold and other commodities priced in it for global trade by making them less expensive overseas.

Gold's strong gains came despite a plunge in crude prices of nearly 5%, driven by demand worries because of slower global growth. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were mostly higher, with silver and palladium adding 0.3% and 0.5%, respectively, while platinum slipped 0.4%.

At the Comex close: August gold surged $18.70 to $1,408; September silver added 5 cents, to $15.24; October platinum dropped $3.70 to $833.50; and September palladium rose $8.10 to $1,552.80 an ounce.

  

Metal Ask      Change
Gold $1,405.33           $-9.40
Silver $15.62           $0.17
Platinum $845.16           $-3.65
Palladium $1,533.77           $-38.76
In US Dollars