Markets are seeing low liquidity today, due to Australian, Hong Kong, UK, and European markets being closed for Easter Monday. Gold hit a low at $1,208 early in Asian trading, but began trending upward soon after. Spot gold is bumping up against the $1,220 mark as the dollar gives up early gains on disappointing economic data.
First support this morning is $1,216, followed by $1,208. First resistance is seen at $1,220, then $1,225.
The dollar is down moderately in New York this morning, giving up gains on disappointing economic numbers. Consumer spending in February was up a marginal 0.1%, and January’s number was revised down to 0.1% from 0.5%.
Personal Consumption Expenditures fell to a -0.1%, compared to a 0.% gain in January. Year-to-year, PCE for February was up 1.0%, falling from a y/y +1.2% in January. The core PCE, which strips out volatile food and energy prices, is the Fed’s favorite inflation gauge. Core PCE for February was up 0.1%, and up 1.7% year-to-year. This is the 46th month in a row that core PCE has come in below the Fed’s desired 2.0% level, despite all the Quantitative Easing and near-zero interest rates. Core PCE is used to calculate GDP, which is running at 1.4%, according to the Alanta Fed GDPnow forecast tool. The previous reading was for 1.9% growth in the US economy.
Stocks are attempting to stop a three-day skid this morning, but are being weighed down by a drop in oil prices that are dragging energy stocks lower. Thin liquidity is hampering all markets this morning, with so many exchanges closed.
Gold may have been pressured by the blitz of hawkish Fed statements last week, but money keeps flowing into gold ETFs. The SPDR Gold Trust, the world’s largest physically-backed gold ETF, closed the holiday-shortened week at a 27-month high of 26.48 million ounces. Gold ETFs as a whole showed a total of 1,770 metric tons, the highest level since December 2013. Thursday was the last trading day of the week, which saw gold ETFs adding to their reserves for the eighth straight day.
Even after last week’s drubbing, gold futures are still up 15% year to date.
Traders looking to hedge their bets aren’t the only ones buying gold. Russian and Kazakhstani central banks increased their gold reserves in February. Russia added 11.1 metric tons to bring their total to 1,447 tons, while Kazakhstan purchased 2.7 tons to bring their total gold reserves to 22.6 tons.
Fed Chairwoman Janet Yellen is scheduled to speak before the New York Economic Club tomorrow morning. All ears will be straining for a clue on an April rate hike, and to see if she is as hawkish as some of the regional Fed presidents.
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