Gold Prices Retain Fed-Based Gains

July 28th, 2016 by

pile-of-gold-rallyGold is holding on to post-FOMC gains that saw spot gold close an even $20 an ounce higher, at $1,339.70. December gold, which settled for the day moments before the release of the Fed policy statement, still managed a gain of $6.20 an ounce. September silver futures were up 1.6% to settle at $19.995 an ounce. Spot silver closed 3.75% higher, at $20.32.

A moderately lower dollar is helping precious metals hold on to gains this morning. Gold futures saw a blip of automated profit-taking early in New York when prices breached the $1,345 level, but it quickly recovered.

The weaker dollar isn’t helping crude prices, as West Texas Intermediate is still trading under $42 a barrel. WTI closed Wednesday at its lowest price since April, settling at $41.92 a barrel. crude oilBrent contracts settled $1.40 lower yesterday, at $43.47. This was also the lowest settlement since April. Things are not forecast to get any better any time soon, as storage for gasoline and other end products is reaching capacity. Refineries are expected to slow down production drastically unless consumer demand picks up. This means that demand for crude will continue to fall, putting even more pressure on drillers.

Buyers were back into bonds Wednesday afternoon, bringing yields back down from daily highs on belief that the Fed is not measurably closer to raising rates than they were a month ago. The 10-year and 30-year Treasury notes saw their yields drop to a two-week low.

Wall St. closed mixed on Wednesday after a jumpy day of trading. The Dow ended flat, the S&P 500 closed down very slightly, and the Nasdaq gained a bit more than a half-percent.

brexit-leaveBrexit is starting to take its toll on the average Briton. Consumer confidence in the UK has dropped to a three-year low since the vote to leave the European Union. In another Brexit-induced shakeout, Lloyds Banking Group announced that is it cutting another 3,000 jobs and closing 200 branch banks in an effort to reduce expenses. This comes on top of 7,300 job cuts that have already been carried out.

Not to worry, though. the bank employees can always find a job at McDonald’s, which is planning on adding 5,000 literal McJobs in the UK by the end of next year. They even supply a suit!

Speaking of the British economy, experts now believe there is a 100% chance of the Bank of England cutting interest rates at next week’s meeting. The Bank of Japan is meeting today and tomorrow, with market watchers waiting to see if Kuroda steps up to the plate after prime minister Shinzo Abe pledged a massive ¥28 trillion in government spending to stimulate the economy. This makes Abe the only leader of a major nation to respond to central bank pleas for fiscal stimulus to match monetary stimulus.

Tomorrow is GDP Friday, as the EU composite and initial US GDP estimates for the second quarter are released. The Atlanta Federal Reserve’s GDPnow forecast tool has dropped from 2.3% to 1.8% this morning. The final read on first quarter GDP came in at 1.1%, compared to an initial estimate of 0.5%.

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