Dollar Strengthens as Gold Hangs In There

The Market Gage - Dillon Gage's Precious Metals Newsletter

Labor Market Holds, Dollar Makes a Comeback and Somebody’s “Un” Trouble Overseas…

Are the rallies in the gold and silver market starting to lose enthusiasm? Many leading analysts are saying that on the heels of a better than expected July jobs report, the U.S. dollar is starting to strengthen, which is set to temper market interest.

The dollar reached a 13-month low last week, but is expected to make some modest gains, as the jobs report is another strong factor for an economy still doing well, all things considered. The labor market appears to be holding up nicely.

As we start this trading week, gold is hanging on at just under $1,260, with silver doing the same at around $16.20.

One thing about this month in particular is the lack of economic news which could readily move the spot price needle. At the time of this writing, analysts are split 50-50 on another interest rate hike when the Fed meets again. Next item of any significance will be the July report on the Consumer Price Index, which we’ll see by the end of the week.

In geopolitical news, the U.N. Security Council body-slammed North Korea with a new set of sanctions on Saturday. In a unanimous vote, this new resolution targets North Korea’s primary trade exports, including coal, iron, lead, lead ore and seafood. They also target additional revenue streams, including banks and joint ventures with foreign investment. According to leading policy experts in the region, these sanctions should cut North Korea’s annual export revenue by up to $3 billion. As the old saying goes, “Hit ‘em in the pocketbook.” Pyongyang’s official new agency, KCNA replied this morning, “There is no bigger mistake than the United States believing that its land is safe across the ocean.” Precious metals have not yet reacted to this verbal escalation. This is a situation that bears close watching.

Have a wonderful and productive week!

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