Gold bumped up this morning on the Empire State manufacturing numbers, as the survey revealed its biggest drop ever (a reading of negative 8.6 for June following May’s 17.8) which is also the first negative number in over two years.
Overnight, the yellow metal had softened a bit from near its 14-month high as the dollar strengthened and expectations dimmed that U.S. Federal Reserve policymakers will cut interest rates at their meeting this week.
A rate cut is widely anticipated this year – or even more than one. But a report Friday showing that U.S. retail sales increased in May was seen as positive for the economy, reducing the likelihood that a cut will happen this month.
There’s just a 17.5% chance that an interest-rate cut will happen at Wednesday’s meeting, down from 23.3% on Friday, according to the CME FedWatch Tool. It puts the odds of a rate cut at the following meeting at the end of July at 84%. The Bank of England and Bank of Japan are also scheduled to announce rate decisions this week – on Thursday.
Comex Gold futures for the August Contract were at $1,345.2 at the time of this report, up .70.
Traders continue to watch developments in the trade standoff between the U.S. and China and have turned to gold as a hedge against uncertainty.
U.S. Commerce Secretary Wilbur Ross indicated in an interview with The Wall Street Journal on Sunday that watchers shouldn’t expect too much to come out of a possible meeting between the U.S. and Chinese presidents at the Group of 20 summit in Japan later this month: “I think the most that will come out of the G-20 might be an agreement to actively resume talks,” he said.
Gold could be poised to spike, particularly if it breaks above its five-year trading range, JC O’Hara, chief market technician at MKM Partners, told CNBC. But in a technical analysis published in Forbes Magazine, Bill Sarubbi wrote that the yellow metal appears set to decline. He said hedgers are holding 40% of open interest net short and that, in the past, this has led to loses over the next three months. He also noted that prices failed to hold a gain through technical resistance on Friday.
Silver futures have tipped up this morning after settling at $14.80 an ounce Friday on Comex, the August contract is $14.905 at the time of this report. Spot palladium and platinum were both down early Monday. Spot platinum, which is sensitive to the growth of the Chinese automotive industry, fell 0.3% last week and is currently at $797.40. Spot palladium gained 8% last week, but has back off a bit and is currently at $1,463.60.
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