Gold prices are modestly lower to start the week, as the annual summer doldrums begin to take hold. Geopolitical events have delayed the seasonal cycle for the last few years. This year was the Brexit fear and uncertainty, the year before was the Greek debt crisis, and the year before that was the Russian invasion of Ukraine.
Gold and silver prices may continue to soften this week, ahead of the Federal Reserve Open Market Committee meeting on Wednesday, and the Bank of Japan meeting on Friday. While the Fed is expected to stand pat, since the Democratic National Convention is happening as the same time as the FOMC meeting. The sentiment regarding the Bank of Japan’s policy meeting is much more sanguine as 78% of experts expand an enlargement of Japanese QE.
At 10am, spot gold is trading at $1313.00, down $9.10 and $2.00 off the session low. Spot silver prices are at $19.35, down a quarter, and roughly in the middle of today’s trading range so far.
David Sen, writing for FXstreet.com, gives his opinion that the gold market may be entering oversold territory. He calls $1313 as good support, and warns traders against going short in present oversold conditions.
Stocks opened lower on Wall St to start the week, as the usual pullback from bullish sentiment ahead of a FOMC meeting takes hold. Hopes for a resumption of the stock market rally are being pinned on upbeat earnings reports. Reuters quotes one fund manager as saying “We’re in a period where the market’s looking really tired.”
US debt is flat ahead of the FOMC, as bond traders are unsure of just how bullish the Fed’s forecast for the rest of the year will be.
The US dollar is trending barely under Friday’s close this morning, while crude oil futures are down about 1.5% on fears that the record-high gasoline stockpiles will force refineries to cut back on their crude oil purchases. WTI is trading closer to $43 a barrel than $44 in early trading.
The US onshore oil rig count has risen for the last four weeks to record an extra 41 wells producing. This rising rig count of course means higher production. Even if old wells are shut down, the new wells taking their places will have a much higher daily output. Nick Cunningham at OilPrice.com notes that once the backlog (fracklog?) of DUCs (Drilled but Un-Completed wells) is worked through, it will remove a bearish factor when calculating future production levels.
Unfortunately, it seems that terrorist bombings have become so commonplace that the markets just shrug them off. A suicide bomber attacked a music festival in Germany yesterday, wounding 12. Event management had refused him entry into the music festival, so he set off his backpack bomb on the street outside. The bomber, a Syrian national, had been refused asylum in Germany twice, and attempted suicide twice. This is the fourth terror attack in Germany in a single week.
In other news, 80 are dead and at least 230 wounded in Kabul, after an ISIS suicide attack on a peaceful demonstration of Shiites. Only one of the three bombers successfully set off his explosives, else the death toll would have been much higher.
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