UPDATE: U.S. consumer confidence was announced much higher than expected, sending gold down $12 before it recovers.
U.S. consumer confidence for July came in at 90.9, from a revised June number of 86.4. Analysts had expected a downward move of 85.5.
This July reading is the highest since before the financial crisis, and is fueled in large part on future expectations on conditions in the next six months. Gold dropped to test support at the 200 DMA level, stabilizing just under $1300.
Spot gold closed at $1303 Monday, after trading choppy but flat. Silver was much the same, seeing a slide and partial recovery late in New York trading. Platinum was up $10, while palladium lost early gains and closed flat, up only $1.
Violence is flaring up in an arc from Eastern Europe to Northern Africa, putting geopolitics back on the front burner as the Federal Reserve begins their monetary policy meeting.
Russia is accusing Ukraine of firing across the border into Russian territory this morning. Ukraine has been accusing Russia of allowing rebel artillery batteries to set up on Russian soil and shell Ukrainian army positions, immune from counter attacks. Dozens more people have been killed in recent heavy fighting over the wreckage of Malaysian flight MH17. German corporations are giving German Chancellor Merkel their support for actual sanctions against Russia, increasing the likelihood of meaningful action by the EU.
Israel is intensifying airstrikes on Gaza, as the government re-emphasizes its goal of destroying Hamas rockets and the facilities to make and launch them. Gaza’s only power plant, and the house of the leader of Hamas’s political wing were both destroyed today.
A day after rebels blew up a fuel storage tank at the Tripoli airport, the Libyan government has appealed for international help in controlling the blaze. Italy has responded, and is sending seven planes with firefighting gear and experts. Late yesterday, the fire caused a second fuel storage tank to explode, worsening the situation. At least 30 people have died in the fighting around the airport.
The spread between West Texas Intermediate crude oil and Brent crude is widening again, with WTI at $100/bbl, and Brent at $107. The dollar hit a seven-week high after the consumer confidence report, which is putting pressure on gold and oil.
Tomorrow is the end of the FOMC meeting, which will be followed by an announcement. There will be no press conference by Janet Yellen after the statement is released. The next FOMC meeting is in mid-September, and will be followed by a Yellen press conference.
Tomorrow morning is the US GDP report for the second quarter, using the new, happier numbers. The past numbers are going to be changed as well, all the way back to 1999, to make people feel good.