Gold prices were pulled out of their tight range this morning as US retail sales for July came in flat, far below expectations. Producer prices also fell last month, as losses in the oil futures market dragged down energy costs.
This data is seen as reducing the chances of an interest rate hike by the Federal Reserve any time in the next few months. This sentiment sent the dollar sharply down by more than a half-percent against a basket of major currencies. Spot gold prices took the opportunity to jump more than 1%, from $1,339 an ounce to $1,356. Spot silver also rose 1% to climb back above the $20/oz mark.
Precious metals futures this morning are seeing profits as well, though to a lesser extent. Both December gold and September silver settled much higher Thursday than spot prices. Gold is still up more than 27% year to date. Silver futures are slightly outperforming spot silver year to date, 45% higher while spot silver is 43.5% higher for 2016.
The stars aligned on Wall St yesterday, as all three major indices ended in record territory for the first time since December 31, 1999.
This morning’s disappointing retail sales and wholesale prices reports had equities open modestly lower, as the market drifts in the usual August fashion. In the absence of any overriding fundamentals, prices follow that particular day’s economic news.
What has been a significant factor in stock prices is the oil market. WTI is aiming to put its best week since April in the books today. Prices are being supported this morning by the latest Saudi “jive talking,” dangling the possibility of reduced production by OPEC in order to spark “buy the rumor” market action. None of the hints and statements out of Riyadh this year have borne fruit, however.
Even though the US dollar took one to the face this morning, the British pound is worse still. The GBP seems unable to shake off the Brexit Disease, as the Bank of England’s newly-announced money printing scheme adds insult to injury.
Treasuries are being heavily bid this morning in the wake of the retail sales and producer price index reports. The 10-year Treasury note has seen its yield drop to 1.490%, the second-lowest level in history.
The CME Group FedWatch tool, which uses Federal Reserve funds futures rates to estimate odds of an interest rate hike, is giving a paltry 12% of a rate hike next month. The odds of a December rate hike improved slightly, but is still less than 43%.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product