Gold prices are seeing strong gains in early New York trading, with spot gold up over $20 an ounce and climbing. The anticipated consolidation after Friday’s $33 gain never materialized, as risk-off sentiment and a weaker dollar have provided support.
Gold is also getting fresh bids in Europe as the German 10-year bund drops to a record 0.033% with the European Central Bank starting buy corporate bonds today.
The dollar is sliding further this morning, down to fresh four-week lows. Odds that the next Fed rate hike may not happen until September, and Brexit contagion spreading globally are two major factors in the dollar’s woes.
Technical support for gold starts at $1,252, with the next support at the overnight low of $1,245. First resistance should be encountered at $1,262, then $1,268. Gold is up $50 an ounce since Friday morning.
The oil rally continues this morning, and continues to give stocks a leg up. Crude prices are up almost 2% in early trading in New York. Markets are expecting a drawdown on US crude stockpiles when the official Energy Information Administration releases its weekly report at 10:30. Continued bombings of oil pipelines in Nigeria by militants is keeping over 1 million barrels of oil a day off the market.
Dollar losses are accelerating to fresh four-week lows this morning, as bets on a Fed rate hike move further down the calendar. The DXY dollar index is down more than 5% year to date.
August gold futures lost a paltry 40 cents yesterday, to settle at $1,247.40 an ounce. Spot gold closed the day down $1.50 at $1,243.20 an ounce, near the top of the day’s trading range.
Oil prices once again rode to the rescue of the Dow and S&P 500. Both indices gained modestly on Tuesday, while biotechs pulled the Nasdaq to a small loss. The S&P gained a tiny 0.1%, but it was still enough to mark the highest close since last July. The Dow also ended just 0.1% higher. The Nasdaq lost 0.1%
US crude futures closed above $50 a barrel for the first time in 11 months Tuesday, settling up 67 cents (1.4%) to $50.36. International benchmark Brent crude ended the session 89 cents higher (1.8%) to close at $51.44. Both futures edged higher in aftermarket trading, after the American Petroleum Institute reported US crude stockpiles fell by 3.6 million barrels last week. With the API report being wildly off the mark compared to the official government numbers the last few weeks, some traders may stand pat until the Energy Information Administration numbers are released this morning.
The dollar has still been unable to find its feet since the worst jobs growth in over six years was reported Friday. Fed head Janet Yellen’s speech Monday further deflated the greenback, by pushing back the likely date for another rate hike to this September. The dollar ended at a one-month low against a basket of currencies.
The pound sterling stopped its recent skid as fickle investors took heart in a new slate of polls giving the “Remain” camp a slight lead in the Brexit fight.
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