Market Updates

Good morning everyone.

Some fairly brutal price action was seen on Tuesday, particularly during the offshore time zones of Europe and the US, with gold slammed lower USD 13.00 and AUD 22.00 as profit taking / long liquidation shook out some of the weaker long positions and late-to-the-party speculative longs. As noted yesterday however, given the present geopolitical climate, dips would likely be well supported as investors who missed the initial move higher were given the opportunity to “get on board”. Thus it was that gold was able to erase all of its losses on the day and surge to its highest level in USD terms since September 22nd last year by the close of trading in New York.

Good morning everyone.
 
Gold gapped approximately USD 10.00 and AUD 7.00 higher on the open in Asia yesterday, as the markets had their first opportunity to react to the news that the Democratic People’s Republic of Korea (DPRK) had conducted its sixth (and largest to date) nuclear test, which had registered 6.3 on the Richter Scale amidst claims that the device detonated was a thermonuclear Hydrogen bomb.

It’s been a strong month for precious metal bulls, with the price of gold rallying well above USD $1300oz, up some 5% since the start of the August. Year to date, the metal is now up approximately 15%, a fantastic return in an environment where broader volatility has been subdued, and crypto-currency mania has dominated financial headlines.

Silver has also performed well, rising by almost 7% in the last month (+12% YTD) to trade just below USD $18oz at present, with the precious metal complex as a whole strongly outperforming risk assets over the past month.

After being range bound and unable to break through the key US $1,300oz level since Nov 2016, gold has staged a sharp rally overnight on the back of heightened tensioned on the Korean Peninsula.

Early on Tuesday morning Australian time, North Korea fired a missile that flew over Japan and landed in the Pacific waters off the northern region of Hokkaido.

Good morning,
 
Gold – as described by Andre in yesterday’s morning wrap – broke free post-Jackson Hole in hectic trading. Notably pull-backs in price pre the Jackson Hole newswires in both XAUAUD and XAUUSD held the support levels mentioned last week at A$1613 and US$1278 before rallying hard, with December open interest rising by round 1.50 million Tozs by last Friday.

Hello everyone,
 
Friday’s trading saw the markets go into a holding pattern ahead of speeches at the central bank conference in Jackson Hole by arguably the two most powerful central bankers in the world, US Federal Reserve Chairman Janet Yellen and the European Central Bank President Mario Draghi.

Markets traded fairly narrowly just ahead of the Jackson Hole Symposium, with Janet Yellen speaking – possibly for the last time – Friday morning. Observers will be keen to see whether the Fed Chair references the persistent lack of inflation, and what sort of course she will chart for the Fed towards normalisation. The Dollar index moved higher to 93.277 and 10 year yields increased slightly as uncertainty over the debt-ceiling grew. Donald Trump has been tweeting his displeasure with senior Republicans over the ‘mess’ the debt ceiling has or may become. So far, concerns still seem muted basis activity over in fixed-income.

Gold and JPY moved slightly higher as the Donald moved swiftly to correct my erroneous and unfounded report via Mitch McConnell that the debt-ceiling was safe in the hands of Congress. Apparently not – however moves were relatively well contained given that the President was addressing a rally in Phoenix, with markets discounting the impact of the message.

Good morning everyone!
 
Markets switched to ‘risk on’ with the US Dollar making a small recovery, and the USD index rallying up to the Daily Turning line at 93.54, where some resistance should be found. Equities rallied, with the S & P 500 rallying up to Standard Line resistance at 2454.

Good morning everyone,
 
Overnight US equities tested lower once again in thin conditions, as the S & P 500 tested both trend line support and support from the Daily Cloud, before recovering to close at 2,428. North Korea continues to spit warnings at the US, with ‘merciless revenge’ on the menu if the US, South Korea and Australia continue with the snappily titled ‘Ulchi Freedom Guardian’ annual war games. Despite the tensions, the USD index sank lower to trade this morning at 93.10 with the JPY remaining strong, although unable to break higher. US Treasuries continue to be well bid with yields closing at 2.19 per cent for the generic 10 year bond. This week has some major speeches from ECB President Mario Draghi and Fed Chair Janet Yellen as Jackson Hole gets underway the day after tomorrow, with Unemployment gains (expected to be 237 k) and Core Durable goods (expected to be 0.40 %) ahead on Thursday and Friday respectively.

Good morning everyone and Happy Friday.

US equity markets were bludgeoned lower on Thursday as President Trump disbanded his council of economic advisors consisting of the CEO’s of many of the nation’s largest corporations, many of whom decided to hand in their resignations from the council following the President’s response to last weekend’s events in Charlottesville, Virginia. The USA is currently a nation riven by political and racial division to an extent not experienced in an exceptionally long time and this turbulence as well as another tragic event in Spain (which to all intents and purposes appears to be a terrorist incident), are likely feeding the ‘bid’ tone across the precious metals complex at present. Additionally, as noted earlier in the week, the Korean peninsula, the Middle East, Iran, Venezuela and Russia all remain US foreign policy flashpoints.

Good morning everyone.
 
A mixed day for gold on Wednesday, the precious metal closed higher in XAU/USD terms but remained under pressure in XAU/AUD terms as the major currency pairs (EUR, JPY, AUD) saw the Greenback weaken due to the release of ‘dovish’ minutes from the most recent meeting of the US central bank’s Federal Open Market Committee. Divergent opinions from committee members regarding the timing of future interest rate increases were also evident.

Good morning everyone,
 
Precious metals activity yesterday followed in much the same vein as Monday. That being, that as the US Administration and North Korea took their recent thermonuclear war rhetoric down a notch, investors were enticed back to the ‘risk on’ trade, driving US equities back towards record highs and propelling the US Dollar Index higher as the Greenback strengthened across all the major pairs (EUR, JPY, AUD). This consequently led to softer precious metals values as the major cause of the latest advance (i.e. geopolitical heat), received less prominence and fed a continuation of profit taking and speculative long liquidation in the metals.

Good morning everyone.
 
Range trading / consolidatory type price action characterised trading in gold and silver to commence the week, as a rebound in the US Dollar Index and US equities, as well as a modest dialling down of the bellicose rhetoric between the US administration and North Korea triggered profit taking and modest long liquidation but which also provided investors with a dip-buying opportunity.

Good morning everyone and I trust you had a good weekend.
 
Geopolitical ‘chaos’ underpinned the advance across the precious metals complex last week forcing investors to flick the switch from ‘risk on’ to ‘risk off’ and to decamp to safe haven assets. The white-hot rhetoric between the US Administration and Pyongyang has received saturation coverage in the media so there is no need for reiteration in this commentary.
 
Perhaps not surprisingly, some of the gains were pared on end-of-week booksquaring and profit-taking.

Having been in business since 1972, ABC Bullion now services over 40,000 clients, who utilise our services to buy, sell and store gold. This includes those who save regularly in gold (via our Gold Saver product), invest for their portfolios (in particular, SMSF clients hedging stock market risk) as well as those who buy for cultural reasons, including large sections of the Indian community who find it auspicious to buy during festivals like Diwali.

Having this diverse direct client base allows us to gain an insight to the market that one may otherwise struggle to come across, and helps augment our views, which are also obviously influenced by ETF flows, futures positioning, equity market volatility, inflation dynamics, USD strength or weakness, etc.

This week, we wanted to share an insight from one particular group of clients, and that is the large number of jewellery shops who service Sydney’s Chinese and Vietnamese community, who buy gold from ABC Bullion.

Good morning everyone and I trust you had a good weekend.
 
The long and short of trading on Friday was that gold and silver had the wind knocked out of their sails somewhat as the week concluded, when much better than expected employment data from the US Bureau of Labor Statistics hit the wires. The headline Non-Farm Payrolls figure for July came in at +209,000 jobs added (vs +180,000 expected) with the Unemployment Rate falling to 4.3% as expected (vs 4.4% the previous month).
 
Not surprisingly the Greenback surged against the majors (EUR, JPY, AUD), driving the US Dollar Index higher. The Dow Jones Index also continued advancing to record highs. Consequently, precious metals were driven lower - arguably a necessary speculative rebalancing in view of the latest CFTC Commitments of Traders Report (as at August 1st) which showed a significant surge back to the long side by non-commercial accounts.

Good morning everyone,
 
Thursday saw range-driven trading in gold ahead of Friday’s US Bureau of Labor Statistics employment data release. Market consensus for the headline Non-Farm Payrolls figure anticipates the addition of 180,000 jobs for July, while the Unemployment Rate consensus is for a figure of 4.3% (4.4% was the prior month).
 
Other economic data releases out of the US overnight were mixed. U.S. Markit Service PMI (July) (final) rose to 54.7 (vs 54.2 expected & 54.2 in Jun), U.S. Factory Orders (Jun) were +3.0% (vs +2.7% expected & positive revised -0.3% in May) and U.S. Services ISM Index (July) fell to 53.9 (vs 57.0 expected & 57.4 in Jun).

Good morning everyone.
 
Choppy / volatile trade was seen on Tuesday with the USD fluctuations the main driver.
 
During Far Eastern trading, XAU/AUD was under early pressure but erased the entirety of its losses after the Reserve Bank of Australia left interest rates unchanged which initially sent the AUD/USD lower, but this too was quickly reversed. XAU/AUD continued its advance during US trading as soft economic data from the US led investors to continue seeking alternatives to the US Dollar for the time being.

Good morning everyone and we return to normal service here after a short break.
 
Month-end and XAU/AUD closed on a firm footing as the Greenback hit its lowest level against the EUR in 2&1/2 years.
 
Who needs Game of Thrones or Reality TV when head-spinning developments seemingly come thick and fast from the Trump Administration? In the latest instance, the swearing in of President Trump’s new Chief of Staff General John Kelly on Monday led to the instant removal of the President’s freshly appointed Communications Director, Anthony Scaramucci - 11 days into his new role to be precise.

Gold
Gold has had a powerful recovery through the last three weeks of July as the price held technical support at US$1208 level, dipping below very briefly before a surge of physical demand sent the price higher again to make a high at US$1271.20 so far.
 
The main driver of performance was a the USD index (the DXY) plunging through trend line support at the end of June, opening the month at 95.65 and sinking to 93.15, with what looks like critical support at these levels. Look for the DXY to sink to 91.30 if support at current levels fails, further helping gold.
 
Dollar weakness stems from two issues – insufficient evidence to support strong tightening in US rates, with weak inflation numbers and a dovish announcement from the Federal Reserve that continues to play its cards close to its chest, but chose to highlight the fact that inflation continues to grind on below the Fed’s target level. The second issue is that the US President and his immediate family and some officials continue to be mired in allegations over collusion with Russia pre-election, and an inability to deliver on legislation. The failure to repeal ‘Obamacare’ is now eating into other deliverables, like tax reform and reduction, which is where American prosperity will really be determined.

Precious metal bulls have endured a difficult few weeks, with the price of gold falling from USD $1,266.20oz at the end of May 2017 to USD $1,230.30oz on Friday the 14th July. Silver has fared even worse, declining by almost 10%, with the metal ending last week trading at just USD $15.71oz.

Australian dollar investors have also seen the value of their investments decline, hit not only by the fall in the metals themselves, but also as a result of the incredible rally in the AUD, which is currently trading near USD $0.78.

Combined, this has led to a decline of nearly 10% in the price of AUD gold, which has fallen from over AUD $1,700oz in early June to just AUD $1,584oz today.

The chart for gold priced in AUD is included below, with the sharp sell off from early June seen clearly. Year to date, the yellow metal is now essentially flat in terms of performance.

Good morning everyone.
 
Friday’s weak US CPI (+1.6% Y-oY) & Retail Sales data releases saw XAU/USD finally reclaim the technically significant 200 Day moving average, as price weakness from the first week of June to the first week of July culminated.
 
US dollar weakness and a retreat in US Treasury yields was consequently seen, helping to bolster XAU/USD as various Fed officials began to walk back rate hike rhetoric in relation to the September and December meetings of the FOMC. For the moment, gold ETF’s have not benefited with outflows continuing.

Good morning everyone and I trust you enjoyed your weekend.
 
We are running a little lean here this week, so apologies for the morning wrap coming through as a midday wrap today (and possibly for the remainder of the week) but better late than never!
 
In a nutshell, precious metals were placed on the backfoot on Friday after another round of strong employment data from the US. The headline Non-Farm Payrolls figure showed that 222,000 jobs were added and that the unemployment rate increased from 4.3% to 4.4% (vs (+177K & 4.3% expected respectively). The May payrolls number was revised upwards from 138K to 152K and April was also revised upwards from 174K to 207K. A total +47K jobs more than previously reported.

Good morning everyone and happy Friday!
 
A good day for range-traders as the precious metals chopped around / consolidated on Thursday, managing to retain the bulk of recent gains by the close of business in New York.
 
XAU/AUD moved freely between AUD 1608 - 1616 while 1222 - 1230 was the range seen in XAU/USD.
 
Mixed economic data out from the US overnight on balance was beneficial for precious metals.