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Spot Gold Higher, June CPI Flat

July 14th, 2017 by

Gold prices were up sharply on Friday morning after the latest inflation numbers from the Labor Department are expected to show no growth during the month of June. Spot gold traded nearly $13 per ounce higher (+1%) to $1,231/oz, its highest since before the 4th of July holiday.

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Spot silver was more than 30¢ in the green, gaining 2% in early trading to reach $16/oz even. Platinum and palladium advanced 1.5% and 0.6%, respectively.

All of the metals made big jumps from Thursday’s closing numbers:

Gold: $1,217.30/oz (-$2.70, -0.22%)
Silver: $15.68/oz (-22¢, -1.38%)
Platinum: $902/oz (-$13, -1.42%)
Palladim: $852/oz (-$6, -0.70%)

This puts the yellow metal on track for its first weekly gain since late June.

The tech sector helped the Nasdaq yesterday while the big financials helped pull the Dow Jones higher as well. The major U.S. indices were all not far from all-time highs this week as quarterly earnings continue to come in.

Consumer Prices Flat

© Alexmillos Dreamstime.com

© Alexmillos Dreamstime.com

The consumer price index (CPI), which is often taken as a consensus measure of inflation by including all goods and services, came in unchanged during June, and is hovering around 1.6% year-on-year. This remains well short of the Federal Reserve’s official target of stable 2% annual inflation, and seems to stick a fork in the central bank’s plans to continue to raise interest rates. At minimum, it makes more and more investors and traders distrust the narrative of inflation rising alongside interest rates throughout 2017 and into next year.

Persistent disinflation has been a problem for the economy even in its seventh year of modest expansion. Undoubtedly, the rock-bottom levels for the crude oil market is dragging down general inflation, which is indirectly affecting consumer prices, as well. WTI crude traded 0.67% higher on Friday morning at $46.40/bbl, after falling as low as $42.50/bbl just three weeks ago. Not surprisingly, this coincided with a weaker dollar: the USD tumbled 0.4% on the DXY index to just 95.34, its lowest since late September 2016.

Moreover, retail sales growth for June was -0.2%, another disappointing economic data point that is driving market activity. This followed a 0.1% decline in May. Interestingly, the -0.2% overall number included 0.4% growth in the online sales sector. Stocks in the U.S. were mostly higher even as the data was reported, with the Nasdaq climbing 0.2%. Shares in both Asia and Europe were only slightly above or below unchanged. The Treasury market saw a bit of renewed demand, as the 10-year T-note yield finally fell back below 2.30%.

 

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.

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