Gold slipped early Monday as the U.S. Dollar Index traded near a two-week high and as Asian stocks and equity markets around the world rallied after wild swings last week.
The yellow metal had climbed to a new six-year high last week as investors fled to safety amid turmoil in equity markets, fears that the global economy is heading for a recession and negative bond yields.
This morning, benchmark U.S. Treasury yields rose gaining distance from last week’s record lows which led to the market disrupting inverted yield curve (the two- and 10-year bonds inverted for the first time since 2007 on Wednesday).
Also up are global Equity markets. The signs of moves by Germany and China to counter slowing growth cheered investors helping European markets rise for a second session.
December gold futures settled at $1,523.60 Friday on Comex after gaining 1% for the week. Gold has rallied in recent months as a hedge against uncertainty from the U.S.-China trade war, the economy and global unrest. This morning the December contracts are currently at $1,507.90, down $15.70.
U.S. President Donald Trump said Sunday that he doesn’t see a recession coming and that talks with China are going well. “I don’t think we’re having a recession,” the president told reporters. “We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money.”
In separate tweets Sunday, he said that “we are doing very well with China, and talking!” and touted the U.S. economy as “the best in the world, by far.” He said that the U.S. was poised for “big growth” after trade deals are reached with China.
The next scheduled event to watch for comes this Friday at the U.S. Federal Reserve’s annual Economic Policy Symposium in Jackson Hole, Wyoming. Investors will seek signals on both the state of the global economy and monetary policy during the Aug. 22-24 event which gathers dozens of central bankers, policymakers, academics and economists from around the world. Fed Chairman Jerome Powell is set to speak Friday and Bloomberg reports Fed watchers are betting on Powell suggesting he is ready to cut rates again in September.
The Jackson Hole hopes are reflected in the CME FedWatch Tool. It put the odds of a Sept. 18 rate cut at 100% late Sunday. The big move on the tool is the probability of a 25-basis-point reduction is now at 95%, and the likelihood of a 50-basis-point cut at 5%.
One negative economic signal came Monday from Japan. The Ministry of Finance reported that the country’s exports fell for an eighth straight month in July.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.1% Friday to 843.41 metric tons, Reuters reported. And hedge funds and money managers trimmed their bullish position in Comex gold in the week ended Aug. 13, U.S. Commodity Futures Trading Commission data showed Friday.
Silver futures slipped early Monday. They advanced 1.1% last week to settle at $17.122 an ounce on Comex, outpacing gold’s weekly rally. This morning, the September contract is at $16.920, down $0.202.
Spot platinum slipped 1.4% last week, while spot palladium increased 1.9%. Both were higher early Monday.
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