Gold Charting Stable Course

Gold Charting Stable Course

The gold market has been charting a fairly stable course the last few days as traders eagerly await the Federal Reserve’s monetary policy decision, which will be released later this afternoon.

That stability was unshaken by this morning’s positive private sector employment report for July. The private payrolls company ADP said that the past month slightly beat the job growth forecast of 150,000 by 6,000 new jobs.

Gold’s August contracts are up a tad this morning, currently sitting at $1432.20, up $2.50 an ounce ahead of the anticipated Fed interest-rate cut.

December became the most active gold futures contract Tuesday on Comex with the rollover from August sending 2019’s last month up more than $20 an ounce to settle at $1,441.80. Fed speculation, the U.S.-China trade standoff and geopolitical tensions in the Middle East sent gold to a six-year high in July by making the yellow metal more attractive as a hedge.

Investors are watching to see how deep the rate cut is and whether Federal Open Market Committee policy makers will provide indications of their future actions. U.S. President Donald Trump on Tuesday called for a “large” cut. The CME FedWatch Tool currently has the odds of a 50-basis-point cut at 21.9% and the likelihood of a 25-basis-point reduction at 78.1%.

The yellow metal is heading even higher according to Todd Gordon. The founder who called the 2019 gold rally gave this upbeat forecast in yesterday’s interview with CNBC.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, had about $347.5 million in inflows last week, a 0.9% increase from the prior week, according to BNK Invest.

Beyond the Fed meeting, Trump lashed out at China for what he said is its unwillingness to buy American agricultural products and said Tuesday that the country continues to “rip off” the U.S. The world’s two biggest economies just resumed trade negotiations after a three-month standoff. Japan’s central bank left interest rates unchanged Tuesday but promised to act “without hesitation” to battle any economic slump the trade war causes the Asian economy.

China’s manufacturing activity contracted for a third month in July, with the official Purchasing Managers’ Index coming in at 49.7, according to data Wednesday from the Chinese statistics bureau. Economists polled by Reuters had expected it to edge up to 49.6 from 49.4 in June. U.S. July manufacturing numbers are due out Thursday and the monthly U.S. payrolls report comes out Friday.

Meanwhile, the Trump administration is poised to renew waivers that allow Iran to receive international assistance for civilian nuclear projects, after a heated internal debate over whether to dismantle a key element of the 2015 nuclear deal, NBC News reported, citing three sources familiar with the matter. The move is seen as a setback to hawks.

Silver futures, which have outpaced gold recently on Comex, have lost a little shine this morning. The September contract gained 0.7% Tuesday, but it is currently at $16.470, down 0.088. It had risen 1.3% last week. Spot platinum and spot palladium were both up early Wednesday after dropping Tuesday, with palladium vaulting up over $20 this morning.


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