117.60 +0.05 (0.04%)
After hours: 7:34PM EDT
|Bid||117.23 x 2200|
|Ask||118.06 x 2200|
|Day's Range||117.28 - 117.62|
|52 Week Range||117.23 - 129.51|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.40%|
Gold prices on Monday end lower for a second straight session, failing at an earlier attempt to rebound from their lowest levels in roughly a year.
Although US steel prices and physical aluminum premiums have spiked this year after the Section 232 tariffs, metal prices have been largely subdued. Recently, seaborne iron ore prices fell to a multi-month low. Aluminum, zinc, and copper have also come under pressure amid concerns about the US-China trade war. Gold (GLD), which is generally seen as a safe-haven asset, has also been subdued. However, energy prices (XLE) have shown strength amid supply-side concerns due to looming Iran sanctions.
Crude oil lost strength last week and declined for the second consecutive trading week. Carrying forward the weakness, crude oil opened lower on July 16. In the early hours on Monday, crude oil was trading with weakness at three-week low price levels.
Gold prices fall Friday to their lowest settlement in nearly a year, with the precious metal failing to find safe-haven support from the U.S.-China trade dispute, as the U.S. dollar gains for the week.
After pulling back last week, crude oil started this week on a stable note and declined as the week progressed. Following a weak performance for two days, crude oil started Friday on a weaker note and declined to three-week low price levels in the early hours.
In the preceding parts of this series, we discussed how gold prices have remained weaker despite escalating trade war fears and geopolitical tensions. Many of these risks stem from the ongoing trade spats, which would create inflationary (TIP) pressures in the economy apart from uncertainty. Gold (GLD) is often seen as an inflation hedge.
The CFTC (Commodity Futures Trading Commission) reports the position of major players in the futures market through its COT (Commitment of Traders) report. According to the COT report for the week ended June 26, 2018, money managers were barely net long on gold with just over 4,000 net speculative long contracts. According to Commerzbank, “Short positions, in particular, were built up, which means speculative financial investors are currently betting heavily on falling prices.” For the week ended June 3, money managers kept their positions almost unchanged, which implies the lowest levels of net long positioning since late 2015 when gold prices dipped below $1,050 per ounce.
Gold prices end higher Thursday, a day after a fresh round of global trade-war worries buoyed the dollar and sent the yellow metal to a more than one-week low.
On June 23, 2016, the world was caught by surprise when British citizens voted to leave the European Union (HEDJ) (VGK). Currency and equity markets were in turmoil as a result of the exit decision, while safe-haven assets including the US dollar, the Japanese yen, and gold surged. After almost two years, the uncertainty related to Brexit could again come in as a support for gold and other precious metals.
As we’ve discussed previously in this series, the escalating trade tensions haven’t been able to support gold much in 2018 mainly due to the simultaneous appreciation in the US dollar (USDU), which has capped gold’s gains. While the index for current conditions came in as expected, the sentiment over future business conditions and income prospects declined. Investors should note that consumer spending (XLY) constitutes more than two-thirds of the US economy.
The US non-farm payroll figure for June improved at a marginally slower rate than in May. In June, 213,000 jobs were added compared to 244,000 in May. The data for June, however, beat the market expectation of 195,000 job additions. The broader market S&P 500 Index (SPY), the Dow Jones Industrial Average Index (DIA), and the NASDAQ Composite Index (QQQ) rose 0.85%, 0.41%, and 1.34%, respectively, on Friday, July 6, after the announcement of the non-farm payroll report. The US unemployment rate threw a surprise for June as it grew to 4.0% from 3.8% a month earlier.
A yield curve tracks the yields of Treasury securities maturing at different time periods. The narrowing of the difference between these yields is usually referred to as the “flattening of the yield curve.” The more concerning thing is when the yield curve (BND) inverts, which means that the yields on shorter duration securities increase those on the longer-term securities. The inversion of the yield curve has been a good indicator of an upcoming recession in the past.
The Federal Reserve released the minutes of its June meeting on July 5. The Fed raised interest rates (TLT) by 25 basis points to 1.75% to 2.0% at its June meeting, the second time in 2018. The committee listed the strong labor market, federal tax and spending policies, and high levels of household business confidence as positive factors supporting US economic growth.
Gold prices have gone through a rough patch recently with prices closing near their seven-month lows. Gold is hitting lows despite many factors that are favoring its safe-haven status. Despite the escalation of trade war fears and political tensions in the European Union, gold prices have been trending lower. While these factors have helped gold, the US dollar is also attracting bids because of these factors, which has capped gold’s gains.
After a brief pullback last week, crude oil started this week on a stable note by closing higher on Monday. Maintaining the strength, crude oil opened stronger on Tuesday and moved towards the highest levels traded since November 2014 in the early hours.
Crude oil pulled back last week and broke the two-week gaining streak. Crude oil regained strength on Friday but didn’t close the week higher. On Monday, crude oil opened higher and was trading with mixed sentiment in the early hours.
Gold tested the low end of its trading range in May. As gold has shown price weakness ahead of Fed rate increases, we expect gold to continue to drift around the bottom of the range until the expected rate increase on June 12. Futures positioning and flows into gold bullion exchange traded products suggest gold is poised for another post-Fed meeting rally. The immediate challenge comes from strong economic growth and robust jobs numbers that bolster the case for higher interest rates.
This Week On the Economic Calendar, CPI and PPI Not much on the economic calendar this week of consequence, except for the Producer Price Index (PPI) and the Consumer Price Index (CPI). The former will be released on Wednesday, with consensus at 2.71%. Last month came it at 3.1% annual inflation. As for the CPI, […] The post Market Morning: CPI on Tap, Mayday In London, German Tariff Deal, Bond Bear Growls appeared first on Market Exclusive.
The second half of 2018 should be very interesting for the gold market. The chart shows the gold price has formed a wedge or pennant pattern that has been in place for several years. The positive aspect of this pattern is the trend of higher lows.
The summer malaise settling on stocks has done little to help gold prices. In fact, the yellow metal just plunged to its deepest oversold levels since December 2016. What is ailing the SPDR Gold Shares Fund (NYSEARCA:GLD)? And more importantly, how can we capitalize on its pain?
Gold futures settled lower Friday, but still notched a slight gain for the week, after a mostly upbeat U.S. jobs report was seen keeping the Federal Reserve on a path toward gradually higher interest rates. Beyond the day’s data, the latest lobs in the trade spat between the U.S. and China took effect Friday as expected, casting a somewhat cautious tone across riskier financial markets including U.S. stocks, yet again failing to gin up the typical demand that historically would have flowed into haven gold. For the week, the gold futures contract gained roughly 0.1%.
The U.S. economy added 213,000 jobs in June, beating economist expectations of 195,000. The unemployment rate rose from 3.8% to 4.0% while wage growth climbed at a 2.7% year-over-year pace. Yahoo Finance's Seana Smith, Pras Subramanian and Julia La Roche discuss.