China makes big liquidity injecting into its economy. China's central bank on Friday made its biggest addition of liquidity to the economy in five months via its medium-term lending facility to support growth. The People’s Bank of China will inject 500 billion yuan into the banking system this month, resulting in a net injection of 100 billion yuan. “The addition of liquidity is a sign Beijing intends to keep liquidity ample, following disappointing economic growth data for the second quarter, and ahead of its late July Politburo meeting. The size of the liquidity operation is another sign Beijing intends to keep liquidity ample,” said Bloomberg. Meanwhile, government bond issuance is expected to rise to a record in the third quarter, putting pressure on the central bank to increase cash injections to support demand for debt, said the report. This news is positive for gold because of its implications for better domestic consumer demand for gold jewelry.
Trump mulls “massive attack” on Iran to bring it back to negotiating table. President Trump said he’s considering a “massive attack” on Iran to push the nation to negotiate a peace deal. Trump told Axios in an interview that he was “close to making a decision” on attacks that would be “bigger than ever before.” Iran isn’t ready to make a deal and “they haven’t received enough pain yet,” Trump was reported as saying and as reported by Bloomberg. “The president’s remarks underscore the bind he finds himself in after renewed fighting caused an interim peace deal to collapse and all but closed the Strait of Hormuz. In a Truth Social post Thursday, Trump threatened “major military punishment” on Iran and the Houthi militant group it backs in Yemen if they target commercial ships. The Houthis claimed strikes on Saudi oil tankers this week, opening a new front in a conflict that has driven crude oil prices higher..
New U.S. tariffs imposed on dozens of countries. The U.S. said it will collect duties of between 10% and 12.5% on imports from most major trading partners, following an investigation into the alleged failure of around 60 economies to prevent forced labor in their supply chains. Goods from some trading partners deemed to have adopted forced-labor restrictions will be subject to 10% tariffs, including Mexico, the U.K., Canada and India, while duties on items from the European Union and Taiwan won’t exceed 10%. The rates under the new authority took effect 12:01 a.m. EDT today, with certain exemptions, such as for products that can’t be produced in the U.S. or where tariffs would cause economy-wide disruptions.
“Global Bonds Are Reeling as Oil Surge Renews Inflation Threat.” That’s a Bloomberg headline overnight. “Global bonds are being pummeled by the latest resurgence in energy prices, delivering losses to investors who bet the worst of this year’s rout was over. The average yield on the Bloomberg Global Treasury Index has surged to 3.68%, surpassing a peak from three years ago to reach the highest since the global financial crisis in 2008. A further sell off in bond markets would add to concern that global debt levels are becoming unsustainable, push up global corporate borrowing costs and risk spurring a rotation away from stocks,” said the report. U.K. gilt yields this week set their longest period of daily closes above 5% in almost two decades, while Germany’s 10-year yield climbed to the highest since 2011. Japan’s 40-year yield jumped 10 basis points on Friday alone, while the five-year yield is at the highest since its debut in 2000. The U.S. 30-year yield is just below the highest since 2007. ”Traders are also coming to grips with new Chairman Kevin Warsh’s revamp of Fed communications designed to provide less forward guidance — raising the prospect that any change in policy may come sooner than anticipated. Bets on a rate increase at the Fed’s July 28-29 policy meeting have risen, with the market-implied probability now standing at a one-in-three chance,” said Bloomberg.
The key outside markets today see the U.S. dollar index slightly lower. September Nymex WTI crude oil prices are lower and trading around $89.00 a barrel. The yield on the benchmark 10-year U.S. Treasury yield is presently 4.7%.
Technically, August gold futures see a price downtrend on the daily bar chart that has stalled out. Bulls’ next upside price objective is to produce a close above solid resistance at the July high of $4,400.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the June low of $3,955.40. First resistance is seen at $4,100.00 and then at Thursday’s high of $4,144.00. First support is seen at the overnight low of $4,024.00 and then at $4,000.00. Wyckoff's Market Rating: 3.0
September silver futures also see a price downtrend on the daily bar chart that has stalled. The next upside price objective for the bulls is closing prices above solid technical resistance at $65.00. The next downside price objective for the bears is closing prices below solid support at $50.00. First resistance is seen at $60.00 and then at this week’s high of $61.27. Next support is seen at $57.00 and then at the July low of $55.00. Wyckoff's Market Rating: 2.5
