DAILY REPORT : Wed 15 Aug 2018

MACRO The market got some relief overnight as the Turkish Lira recovered somewhat (~7%). President Recep Tayyip Erdogan yesterday said Turkey would boycott US electronic goods like the iPhone in retaliation for punitive sanctions from Washington, as the Turkish lira finally clawed back some of the ground lost in its stand-off with Washington. While the TRY recovered somewhat, the underlying issue however remains unsolved. This though did not deter a return to 'risk on' activity across markets. U.S equity indices bounced Tuesday, with the S&P500 snapping its longest losing streak since March, rising +18.03 points (+0.64%) to 2,839.96. The DJIA also rebounded +112.22 points (+0.45%) to 25,299.92 as did the NASDAQ Composite, up +51.189 points (+0.65%) to 7,870.895.

European stocks crept higher to mark the first advance in three sessions, as Turkey’s currency meltdown showed signs of steadying. Germany’s economy saw growth of +0.5% in the second quarter which was better than expected, yet global trade tensions and Turkey’s currency crisis are clouding the business outlook. The FTSE EuroFirst 300 inched up +0.89 of a point (+0.06%) to 1,506.77, while the EuroStoxx was flat at 384.92. Regionally the DAX was flat, FTSE100 was down -0.4% and the CAC40 lost -0.16%. The energy sector was slightly higher, helped by gains in the natural gas markets. However, crude oil prices remained under pressure as concerns over rising inventories weighed on sentiment (WTI -$0.55 or -0.85% to $66.63 bbl). Rumours emerged during the day that the American Petroleum Institute’s stockpile report would show a decent rise in inventories last week and this was eventually the case, with a 3.66m barrel rise reported. That comes in face of expectations of a large fall in the stockpiles when the weekly EIA report is released tomorrow. However, investor appetite was already waning on the back of a stronger USD. Reports that Libya’s crude oil output has risen to more than 1mb/d also weighed on sentiment. In the G10 space, the Euro was well offered, taking another leg lower to the mid 1.13 level after breaking through the 200 DMA at 1.1365. Flows yesterday were relatively quiet despite the price action with some macros and corporates being strong buyers of Euros on the dip.

In the U.S export prices showed signs of President Trump’s tariffs with agricultural prices falling sharply. Farm prices fell -5.3% MoM, the largest drop since 2011, while soybean prices fell -14.1%. Overall, export prices fell -0.5% MoM, moderating to 4.3% YoY (from 5.3%). Import prices were flat on a monthly basis but are up 4.8% YoY, from an upwardly revised 4.7% (previously 4.3%). Import prices from China were down 0.2%. Small business optimism in the U.S remains elevated, rising to 107.9 in July from 107.2 in June and beating expectations. The index sits at the second highest level in its 45-year history. Across the Atlantic, Q2 GDP growth in Germany was stronger than expected at +0.5% QoQ (+2.0% YoY) boosted by an increase in private and government spending. For the euro area as a whole, growth was estimated at +2.2% YoY, however, industrial production fell -0.7% in June. Encouragingly, there was a 2rebound in investor sentiment in August with the ZEW survey of current situation rising to 72.6 from 72.4 and expectations rebounding to -13.7, from -24.7. Inflation in Germany and France was confirmed at 2.0% and 2.3%, respectively. UK unemployment continued to fall, dropping to 4.0% in the three months to June, the lowest level since February 1975. Employment rose by +42k, less than forecast, but the participation rate dipped to 75.6%. There was a record drop in employment among EU nationals, falling - 86k, as Brexit impacts reverberate through the business community. Weekly earnings were up 2.7% YoY excluding bonuses. Overall, the labour market continues to tighten, however the BoE is likely to remain cautious in policy normalisation.

PRECIOUS A relatively muted session for gold on Tuesday, even amid stronger U.S. equities and further dollar strength. Early Asian session weakness gave way to interest out of China to halt a test toward the previous session low print. We saw the Chinese premium trade around USD $5 as USD/CNY failed to extend recent gains, supporting bullion through USD $1,195 or through USD $1,200 December futures. Offers above the key futures figure kept a lid on any further top-side gains, while a leg higher to the greenback in New York reversed the Asian session gains to have bullion end relatively flat on the session. Silver found short-term support to hold the USD $15 handle, while platinum failed to see interest at USD $800 and slipped below the figure.

Gold extended declines during Asian trade on Wednesday, pressured through the USD $1,192 support level leading into the Chinese lunch break. We once again saw interest in Shanghai as the on-shore premium held above USD $5, however a firmer greenback outweighed the demand to see gold to a fresh cycle low of USD $1,186.30. The ongoing global trade disputes remain supportive for bullion and we should see interest toward USD $1,180 and USD $1,172 restrict further declines over the near term. Of note is the further extension of short positioning and we may see some of this unwound should gold break through top-side targets at US $1,200 and USD $1,210. Silver slipped through the USD $15 support level in Asia today and may see weakness extend toward USD $14.80, while both the white metals retreated.

Data releases today include U.K. CPI, U.S. mortgage applications, U.S. Empire manufacturing, U.S. retail sales and U.S. industrial production.

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

 

 

DAILY REPORT : Thursday 09 Aug 2018

MARKETS/MACRO The Chinese Ministry of Commerce announced additional 25% tariffs on US$16 billion worth of US imports to be activated on August 23rd, the same day that the US will impose 25% additional tariffs on US$16 billion worth of Chinese goods. The goods being targeted include fuels, steel products, automobiles, and medical equipment. US equities were mostly lower on the news, the Dow lost 45.16 points, or 0.418%, to 25,583.75, the S&P 500 slipped 0.75 points, or 0.03%, to 2,857.70, while the Nasdaq gained 4.67 points, or 0.06%, to 7,888.330. There were wins for tech (+0.28%) and financials (+0.26%) while consumer staples (-0.77%) and energy (-0.76%) weighed on the markets. European equities were mostly lower, the EuroSTOXX fell 0.80 points, or 0.20%, to 389.69, the German DAX shed 14.65 points, or 0.12%, to 12,633.54, and the London FTSE 100 rose 58.17, or 0.75%, to 7,776.65. Currency majors endured a volatile day, the US dollar index dipped below 95 before surging up to reach 95.406 in early NY hours, followed by a sharp fall back to 95.09. The EUR hit 1.1626 early before being sold sharply to 1.1574 then recovering to 1.1615, while USD/JPY traded down to 110.83. US treasury yields were lower, the 2 year yield remained unchanged at 2.6697% while the 10 year yield eased 0.01 bps to 2.9618%. Oil prices were sharply lower as the US-China trade dispute escalated, Brent sold off 3.32% to $72.17 while WTI tumbled 3.50% to $66.75. There was no significant economic data released overnight. In Asia today, as I write the Nikkei is at -0.20%, the Shanghai composite is at +1.82%, the Hang Seng is at +0.86%, and the ASX S&P 200 is at +0.50%. On the data front tonight, we have producer price index, wholesale inventories, and weekly jobless claims out of the US.

PRECIOUS Gold opened at $1211 and made a slow grind higher during Asian hours. The SGE premium was around $3-4 and we saw decent interest from the Chinese banks, the Asian high of $1214 was printed in the late afternoon. London bought the metal to the session high $1215 as USD/JPY traded below 111, but quickly turned sellers as both GBP and the EUR were sold heavily against the greenback. Gold reached $1209 just before NY came in and posted the day’s low of $1206 just after the bell. The yellow metal made a sweep higher to $1212 before dropping back to $1208 in volatile morning trading. A $4 jump in the afternoon saw the market at $1213, which would turn out to be the closing level. Silver reached $15.45 before a sell off to the day’s low $15.27, the grey metal managed to pare the losses in NY trading and finish higher at $15.38. Palladium traded below $900 for the first time in 2 weeks, while platinum remained all but unchanged. In Asia today, gold remained in the $1212-15.5 range through most of the day with the SGE premium easing slightly to $2-3. The yellow metal reached a high of $1216.10 in late afternoon before being sold off on broad strength in the USD. Gold reached a low of $1211.00 and is sitting at $1212.10 as I write. Silver traded above yesterday’s high earlier in the day but has not been immune to the late sell off, the grey metal is at $15.38 as I write. Palladium is testing Wednesday’s low at $894. 

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

 

 

DAILY REPORT : Friday 03 Aug 2018

MARKETS/MACRO U.S. stocks ended what was a rocky session decidedly higher on the back of a record rally by Apple that took the iPhone maker to a market cap above $1 trillion, a run-up that helped Wall Street set aside ongoing trade issues between the U.S. and China. The S&P500 rallied +13.86 points (+0.49%) to 2,827.22, the NASDAQ Composite surged +95.399 point (+1.24%) to 7,802.685, while the DJIA only managed to tread water, down -7.66 points (-0.03%) to 25,326.16. The best performing sector was Information Technology, of course led by Apple (+1.4%), while the worst performing sector was Materials ( -0.70%). European equities however endured a very heavy session with investors concerned about the escalating trade rhetoric between the U.S and China, with the latter firing back and saying they will not be 'blackmailed' and would swiftly retaliate to any move by the U.S. As a result the EuroFirst 300 index retreated -13.03 points (-0.85%) and Euro Stoxx 600 slumped 3.20 points (-0.82%) to 386.64, while regionally the FTSE100 dipped -0.85%, DAX sold off -1.50% and CAC40 lost -0.68%. Fixed income was bid with U.S Treasury yields down 1.5–2.5bps across the curve, notably the 10y yield decreased -2.05 bps to 2.986% and the 2y yield fell -1.42 bps to 2.663%. Base metals were battered by the ongoing trade conflict barbs and the firmer USD, Aluminium down -0.78%, Copper -0.53%, Nickel -1.91%, while Zinc was higher +0.31%. The BoE unanimously voted to hike the Bank Rate +25bps to 0.75% Thursday. Governor Carney said, “today, employment is at a record high, there is very limited spare capacity, real wages are picking up and external price pressures are declining”. While the MPC’s economic forecasts were little changed from May, the inflation outlook for 2019 and 2020 has increased a touch, consistent with a weaker sterling. Regarding the outlook, the BoE's minutes note: “Although modest by historical standards, the projected pace of GDP growth over the forecast is slightly faster than the diminished rate of supply growth, which averages around 1½% per year. The MPC continues to judge that the UK economy currently has a very limited degree of slack. Unemployment is low and is projected to fall a little further. In the MPC’s central projection, therefore, a small margin of excess demand emerges by late 2019 and builds thereafter, feeding through into higher growth in domestic costs than has been seen over recent years." While further moves in the policy rate will likely be very gradual against a backdrop of Brexit, Carney noted, “we can’t be handicapped or tied by the range of Brexit possibilities”. The MPC estimate the long-run neutral rate lies in the range of 2–3%, so with normalisation expected to remain gradual, monetary policy is set to remain accommodative for some time yet. Markets are not fully pricing in another hike until mid- to late-2019. The GBP initially rallied on the rate hike, but with Carney not overly optimistic during the press conference, gains were not sustained. On the data front yesterday, U.S Initial Jobless claims inched up by 1,000 to 218,000 (220,000 expected) in the seven days from July 22 to July 28, while Continuing claims declined by 23,000 to 1.72 million (Bloomberg consensus 1.75 million). Factory orders advanced +0.7% in June as expected, led by heavy machinery, trucks and passenger planes. Factory orders excluding transport increased +0.4% over the same period.

PRECIOUS Gold slipped to fresh lows overnight as the USD continued to rise, particularly as USDCNH broke through the 6.85 ceiling. Gold opened at $1216 yesterday and was met with some consistent Asian buying off the bat. This only continued as the SGE opened, with the premium on the exchange remaining surprisingly stable at around $4.00. Spot gold hit the days high of around $1221.00 an hour into the Shanghai AM session, although some risk aversion began to creep in following China's trade retorts with Chinese equities trading down -3.0%. This sent the USDCNH and USDCNY higher and given the close correlation over the past few weeks with gold, the metal ground its way lower. USDCNH continued up to 6.88 throughout London and the gold bears jumped on this and pushed the market below $1215, despite a steady stream of bids from Asian/Indian names on the way down. Gold continued its gradual decline throughout the NY session as the USD continued to rise, base metals dipped and equities pushed higher. We closed more or less on the lows of the day at $1207.50, the lowest point since early July 2017. It feels like it is inevitable now that we will have a test of the psychological $1200 level over the next few days - tonight's NFP print perhaps the catalyst? Record shorts remain in place for Comex specs which has a slight bullish lean at present, although we have not really seen any slowdown in ETF liquidation over the past weeks which does raise a little concern. Similarly the USD remains robust which continues to drive moves in gold. The market was expecting China to come in as buyers today, which was the case, although it was somewhat alleviated by the firmer USDCNH/CNY. We opened at $1207 and initially tracked higher via a combination of fast money spec profit taking and light physical demand. Some offers did accumulate however on Comex at $1210 (cash) and despite a few attempts through there, managed to hold. Once the SGE opened some further demand rolled out and we briefly traded above $1210, but as soon as the USDCNY fixed some +150 pips higher from the previous days close, gold was slapped lower. That was most of the action for the day, with the metal settling in for the afternoon session between $1207-1208.50. Silver tracked gold over the session and is currently sitting lower intra-day, while the PGM's are slightly higher. There is a fair bit to digest on the data calendar today including a host of Eurozone Services and Composite PMI's, Eurozone retail sales and U.S employment data, trade balance and services and composite PMI. 

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

DAILY REPORT : Tuesday 14 Aug 2018

MARKETS/MACRO The Turkish central bank advised that it would take all necessary measures to maintain financial stability, including providing all the liquidity needed by banks, as the economic crisis continues. US equities continued to slide as the crisis in Turkey played havoc with investor sentiment worldwide. The Dow lost 125.44 points, or 0.50%, to 25,187.70, the S&P 500 slipped 11.35 points, or 0.40%, to 2,821.93, while the Nasdaq fell 19.104 points, or 0.25%, to 7,819.706. Losses in energy (-1.22%) and materials (-1.04%) led a near broad decline in the markets. European equities were lower, the EuroSTOXX dropped 0.95 points, or 0.25%, to 384.91, the German DAX shed 65.61 points, or 0.53%, to 12,358.74, and the London FTSE 100 sold off 24.56, or 0.32%, to 7,642.45. Currencies markets were a little more subdued with USD/TRY consolidating around the 7 level. The US dollar crept up 0.05% to 96.31, the EUR reached as high as 1.1431 before retreating below 1.14, USD/JPY dipped to 110.12 before recovering to 110.90. US treasury yields were higher, the 2 year yield firmed 0.4 bps to 2.608% while the 10 year yield added 0.2 bps to 2.875%. Oil prices were lower, Brent fell 0.07% to $72.76 while WTI declined 0.40% to $67.36. Base metals were broadly lower, with zinc (-2.51%) leading the losses. There was no significant economic data released overnight. In Asia today, as I write the Nikkei is at +1.48%, the Shanghai composite is at -0.50%, the Hang Seng is at -0.91%, and the ASX S&P 200 is at +0.76%. Tonight we have the NFIB small business index, import price index, and household debt out of the US; and GDP growth, the ZEW economic sentiment index, and industrial production out of the Eurozone.

PRECIOUS A dismal session for the precious as gold breaks below $1200 for the first time since March 2017. Gold opened at $1211 in Asia, traded briefly to what would ultimately be the session high at $1213, then settled around the $1208-9 level as USD/CNH continued to firm. The SGE premium opened around $1-2 and eased through the day. London were on the offer from the opening bell, selling the metal to $1196 in the AM session. Initially we saw buying below $1200 as the market bounced back to $1202, however the recovery was short lived as the yellow metal slid to a 15 month low $1192 in NY hours. Gold finished the day almost 1.5% lower and only just above the lows at $1193. Silver shed over 2% and traded below the $15 level for the first time since April 2016. The PGMs were also heavily sold, with platinum and palladium finishing at $799 and $890 respectively. The Philadelphia gold and silver index tumbled 3.05%. The SPDR Gold Trust sold 0.19%, to 784.60 metric tonnes. In Asia today, gold is trading between $1193- 96 as USD/CNH comes off yesterday’s high. The SGE premium is firmer at $4-5 over loco London. The yellow metal is sitting at $1195.10 as I write. Silver has traded either side of the $15 level through the day, the grey metal is at $15.02 as I write.

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

DAILY REPORT : Wed 08 Aug 2018

MARKETS/MACRO Global risk sentiment continued its positive run for yet another day with U.S equities higher, firmer UST yields and a slightly weaker dollar on the back of some profit-taking. In FX, we saw most commodity currencies generally outperform last night as stronger commodity prices and a run up in oil assisted the likes of the Aussie and CAD. Elsewhere in the G10 space, we continue to see mainly sellers of Cable, with the pair struggling to engage in the dollar weakness, despite PM May’s recent comments over the weekend saying a Brexit deal with the EU is perhaps the most probable outcome. U.S equities were firmer Tuesday, the S&P500 moving within 0.5% of record highs set earlier in the year, boosted by strong corporate earnings that offset ongoing global trade concerns. Similarly the NASDAQ Composite rose for a sixth consecutive day - its longest stretch since March - buoyed by a surging Tesla stock price (+11%). In the end the S&P500 rallied +8.05 points (+0.28%) to 2,858.45, the DJIA advanced +126.73 points (+0.50%) to 25,628.91 and the NASDAQ Composite increased +23.986 points (+0.31%) to 7,883.664. European equities enjoyed some respite with the EuroFirst 300 Index climbing +8.24 points (+0.54%) to 1,529.85 and the EuroStoxx 600 jumped +1.83 points (+0.47%) to 390.49. Crude oil rose for a second day to its highest level in a week as the resumption of U.S. sanctions against Iran threatened to whittle global supplies at a time when American surpluses are shrinking. U.S. crude inventories that were already close to a 3.5 year low probably declined again last week, according to a Bloomberg survey of analysts. API was said to report U.S. crude stocks fell -6.02M Bbl last week (-3M Bbl expected). WTI closed up +0.1% at $69.08 Bbl and Brent rose +1.0% to $74.51.

The United States will begin collecting tariffs on another $16 billion in Chinese goods on Aug. 23, the U.S. Trade Representative's (USTR) office said on Tuesday as it published a final tariff list targeting 279 import product lines. The USTR said that only five product lines were deleted from a list initially proposed on June 15, but semiconductors, among the largest categories, remained on the list. The latest list brings to about $50 billion in goods that now face a 25% tariff that U.S. President Donald Trump has imposed on Chinese imports in an escalating trade war over China's intellectual property practices and industrial subsidy policies. China has vowed not to be 'bullied' and match Washington's tariff moves with duties on an equivalent worth of U.S. products.

On the data front, the number of job openings in the U.S rose to 6.662 million in June from an upwardly revised 6.659 million a month earlier, above market expectations of 6.646 million. The number of job openings was little changed for total private and for government, while job openings increased for educational services (+20,000) and fell for transportation, warehousing, and utilities (-84,000). Meanwhile, the number of hires was little changed at 5.7 million people. Across the Atlantic, German industrial output dropped by -0.9% MoM in June, worse than market expectations of a -0.5% fall and following a downwardly revised +2.4% rise in May. The decline was led by lower production of consumer (-1.6%), capital (-0.6%) and intermediate goods (-0.8%). In addition, construction activity shrank 3.2%, while energy production rose +2.9%. In the April-June period, industrial output rose by +0.4% QoQ.

PRECIOUS It was a positive day for gold throughout Asia and London yesterday, on the back of a risk on move in China, although once again offering on COMEX in NY parred the gains. Gold opened in Asia on the intra-day lows and very slowly ground its way higher throughout over the first few hours. As China opened the initial move was lower, wiping out the mornings gains on the back of a stronger USDCNY. Risk sentiment improved however as the pair stabilised and Chinese equities shot up +2.8%, dragging USDCNH and USDCNY lower. The premium was firm over the course of the afternoon and as a result spot gold continued to push, up around $1213 by Asia close. It surged higher in London just shy of $1216, although again we saw demand waiver in NY which was a little surprising - especially given the soft USDCNH.

The market today continued to trade within the recent range, although we again have seen strength in Asia. We opened around $1211 and ticked up a few dollars after the open on some light SE Asian physical demand and spec profit taking. By the time China opened for business we were back at the lows/opening level, but quickly ripped $3 higher, with an improved premium to boot. The gold has since held at or above $1212.50, with noticeable and consistent Chinese demand. Currently within the middle of the recent range ($1205-1235), we look to the next data which could potentially drive markets being U.S PPI today and CPI tomorrow. 

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

DAILY REPORT : Thursday 02 Aug 2018

MARKETS/MACRO We continued to see fairly mixed sentiment across global markets yesterday evening with the market digesting both the Fed outcome while assessing the implications of a potential escalation in global trade tensions. The dollar was fairly choppy across the board, though particularly noticeable in USDCNH where we saw the pair hit 6.84 before retracing two big figures lower as Trump reiterated that he was open to further dialogue. U.S. stocks closed mostly lower after the Federal Reserve left interest rates unchanged but signalled another imminent rate increase. Fresh worries over U.S. / China trade friction dampened sentiment although positive results from Apple Inc. buoyed the tech sector and helped the NASDAQ buck the weak trend. The Dow Jones Industrial Average fell -81.37 points (- 0.32%) to 25,333.82, the S&P500 retreated -2.93 points (-0.10%) to 2,813.36 and the NASDAQ Composite added +35.498 points (+0.46%) to 7,707.286. The best performing sector intra-day was IT (+ 0.97%), while the worst performing sector was Energy ( -1.33%). European stocks closed lower, as bolstering trade tensions unnerved investors. The Eurofirst 300 index slid -7.38 points (-0.48%) to 1,526.83 and the Euro Stoxx 600 cooled -1.77 points (- 0.45%) to 389.84, while regionally the FTSE100 sank -1.24%, CAC40 -0.23% and DAX lost -0.53%. Crude oil prices fell sharply after an unexpected gain in US inventories - WTI down -$1.10 (-1.6%) to $67.65 a barrel. Crude oil stockpiles rose by 3.8m barrels last week, according to the EIA, which was against expectations of fall of 3m barrels. The only bright spot for the market was a decline in US crude production, which fell to 10.9m barrels a day last week, the first decline since February this year.

The Federal Reserve held its benchmark interest rate unchanged Wednesday and reaffirmed its plans to continue raising borrowing costs at a gradual pace. The decision to hold rates had been widely expected and came after a two-day meeting of the Federal Open Market Committee. Traders now expect the Fed to raise borrowing costs twice more this year, with bets showing a 92% probability that it will raise the fed funds rate to a range of 2% to 2.25% in September, according to Bloomberg. “Economic activity has been rising at a strong rate,” the Fed’s statement said, thanks to strong household spending and business investment. An advance estimate of secondquarter GDP released Friday showed that the economy grew at an annualised rate of +4.1%, the fastest in nearly four years. During his semiannual congressional testimony in mid-July, Fed Chairman Jerome Powell said that, with appropriate monetary policy, the job market would remain strong and inflation would stay around the 2% target for several years. He said that it was difficult to predict the outcome of the ongoing trade disputes, but that a prolonged trade war would certainly hurt the economy.

The Trump administration said it is weighing up whether to increase the proposed tariff on $200 billion of Chinese goods to 25% from 10%, stepping up pressure on Beijing to change its trade practices. President Donald Trump has asked U.S. Trade Representative Robert Lighthizer to consider hiking the duties, which could be implemented as early as next month. The proposed higher tariff "is intended to provide the administration with additional options to encourage China to change its harmful policies and behaviour and adopt policies that will lead to fairer markets,"  according to Lighthizer. Bloomberg then reported on Tuesday that the administration was considering boosting tariffs by 15%. The U.S. is open to renewing formal negotiations with China, though Beijing must agree to open its markets to more competition and stop retaliating against U.S. trade measures, according to two senior administration officials who briefed reporters on the condition of anonymity. China shot back Wednesday saying that "blackmail" wouldn't work and that it would hit back once again if the United States takes further steps to hindering trade.

PRECIOUS Gold underwent a steady move lower yesterday as the USD pushed higher following the FOMC and ongoing trade tensions. The yellow metal opened at $1224 yesterday and right off the bat the headline 'USTR is planning to impose 25% tariffs instead of 10% tariffs for $200 billion USD goods imported from China' did the rounds. Immediately this pushed the USDCNH from 6.80 to 6.84 and with ongoing correlation remaining very strong between CNH and the metals, gold and silver quickly shot lower. Right on the SGE open the gold fell, although there were bids ahead of $1220 spot. An hour later we were trading up towards the opening levels, as the USDCNY fixed, yet COMEX offers remained plentiful pushing the metals back lower in a choppy fashion. USDCNH/CNY see-sawed throughout the European day and the metals were equally choppy into NY. The increased ADP job figures were released early in the morning local time showing an increase of +219k vs +186k expected, which weighed on gold, trading to a fresh intra day low of $1216.75. There was a brief bit of respite leading into the FOMC, gold climbing back to $1222 before tumbling to the days lows ($1216.50) and closing there. Heading further into the August Summer doldrums, there is a distinct lack of liquidity, evidenced by the short, sharp whippy moves of the past few days. We expect this to continue over the next month with a slight bullish bias. Historically, August is the second most bullish month of the year (after January), so despite the persistent selling on rallies, we do not see it running away to the down-side by any means.

A somewhat robust day for gold today, the metal managed to climb back through $1220 despite a soft close in NY. We opened this morning around $1216 and the gold traded in a quiet sideways fashion leading into the Shanghai open. After pushing higher throughout the morning USDCNH began to sell-off around SGE open which drew out some buying from both Chinese and Japanese traders. We also saw some light physical demand from SE Asian names who were happy to take advantage of a sub $1220 price. Gold ticked up to the days high of $1221 and silver, after some liquidation at the Tocom open, rose back some 7-8 cents towards $16.45. As I write China is just about to reopen for the PM session, with the metals slowly drifting off from the lows. Looking ahead, much focus will be on the BoE later today, where they are expected to raise the base rate by 25bps. The market is over 90% priced for a hike, so absent a major surprise, the focus will be on the central bank’s forward expectations particularly around inflation. We also have Eurozone PPI and U.S factory orders, durable goods orders and jobless claims. 

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

DAILY REPORT : Monday 13 Aug 2018

MARKETS/MACRO Turkey contagion risks were elevated Friday and there was a strong risk-off move in global markets as President Erdogan’s speech failed to calm nerves and President Trump pledged to double the steel and aluminium tariffs against the country. The USD strengthened, treasury yields fell, stocks were sold and commodities were mixed.

The Turkish lira fell -15% on Friday, bringing YTD declines to ~42% in a country with considerable foreign denominated debt. U.S equity markets unwound on the day, the S&P500 notching up its worst daily drop since June. In the end the S&P500 retreated -20.30 points (-0.71%) to 2,833.28, the DJIA lost -196.09 points (-0.77%) to 25,313.14 and the NASDAQ Composite declined -52.672 points (-0.67%) to 7,839.11. Materials faired the worst (-1.4%), while Energy out-performed (+0.3%). European stocks closed sharply lower Friday as worries that problems in Turkey could infect other Euro-zone countries unsettled investors. Banking stocks led the decline: BBVA (-5.2%), BNP Paribas (-3%) and UniCredit (-6%) all slumped and are amongst the biggest lenders to Turkey. The EuroFirst 300 Index plunged -16.69 points (-1.09%) to 1,510.50 and the EuroStoxx 600 relinquished -4.19 points (-1.07%) to 385.86, while regionally the DAX was hammered -1.99%, CAC40 -1.59% and FTSE100 dropped -0.97%. Crude oil prices rose sharply as concerns over supply disruptions intensified - WTI up +1.23% to $67.63 and Brent rose +0.75% to $72.81. With U.S sanctions on Iran back in place last week following the U.S pulling out of the Iran nuclear deal, all eyes have been on the impact on crude oil exports from that country. The IEA warned the sanctions could threaten global oil supply and that maintaining global supply might be very challenging. The U.S is doing its bit to increase production however, with data showing drilling activity is continuing to rise with the number of drill rigs operating rising by 10 to 869, the highest since March 2015. The Turkish lira extended losses, tumbling nearly -15% to a fresh historic low, on Friday as U.S. President Donald Trump announced that he would double tariffs on steel and aluminium for Ankara. “I have just authorised a doubling of tariffs on steel and aluminium with respect to Turkey as their currency, the Turkish lira, slides rapidly downward against our very strong dollar!” Trump proclaimed via his Twitter account, noting that the tariff on aluminium would now be 20% while the levy on steel would rise to 50%. “Our relations with Turkey are not good at this time!” he mentioned. The European Central Bank is also increasingly concerned about Euro-zone banks' exposure to Turkey, the Financial Times reported on Friday, sending bank shares lower as the Lira languished. The ECB, which declined to comment on the FT report, is said to be chiefly concerned about BBVA, UniCredit and BNP Paribas. They have among the largest operations in Turkey, although their local subsidiaries' contribution to the overall balance sheet of the respective company's as a whole is relatively modest. The Turkish lira has resumed its prolonged slide as a rift between Turkey and the United States widens and concerns grow about President Erdogan's grip on monetary policy under a powerful new executive presidency. The headline U.S CPI for July printed in-line with the street at +2.9% YoY (+0.2% MoM) while the core ex-food/energy number ran a bit firmer at +2.4% YoY (+2.3% expected). Real Average Hourly earnings declined 0.2% y/y following a flat June figure.

PRECIOUS Gold showed some signs of life Friday, tumbling during Asia towards $1206, although running as high as $1217 as the currency crisis in Turkey continued, breathing a little 'safe-haven life' into the metal. We opened in Asia Friday around $1213 and as usual the market was focusing on moves in USDCNH to gauge direction in early trade. The pair remained fairly stable - as did USDCNY when it fixed - which kept the spot metal in a tight $2 range between $1211.50-1213.50 throughout the AM. TRY began to come under pressure around the opening of the PM session with USDTRY pushing through 6.00, and the dollar remaining well bid vs. CNH and CNY. The metal shot sharply below $1210 and some weak intra-day longs quickly closed positions dragging the spot gold down to a low of $1206.10. We managed to hold that $1204-07 level once again, with some bargain hunting steadying proceedings throughout the European day. By the time NY came in the yellow metal was trading back through $1210, which continued to gain more safe-haven momentum following Trump's tweeting about extending tariffs on metals from Turkey. Later in the session the EURUSD began to descend which drew out some profit taking and prompted the metal to give up some of the gains and close the day largely unchanged around $1211.50. All in all, we are viewing Friday's session as reasonably positive, as it was good to see the USD strengthen significantly with gold managing to hold its ground - a scenario seldom seen over the past few months. ETF liquidation remains steady at present and the CFTC report still shows an abundance of non-commercial shorts.

Gold today was heavy as the USDCNH and USDCNY continued to advance. The yellow metal remained flat over the first hour of trade, even drifting to the days highs of $1213.80 prior to the Shanghai open. Once China came in for the day, the USDCNH was swiftly bid from 6.8740 to 6.89 which prompted gold to angle lower and push back through $1210. USDCNY fixed some 3 big figures higher which also continued to apply pressure on the metal down below $1208. We did see a bit of Chinese demand surface toward the end of the AM session, although it wasn't enough to push the metal back through $1210. As I write the USDCNH has edged a little lower and gold is trickling higher, so it will be interesting to see what direction we take on the SGE re-open. In other markets Asian equities are getting hammered, the Nikkei currently -1.95%, Hang Seng -1.85%, ASX200 -0.45% and Shanghai Composite -1.8%. Crude is lower on the day and dollar is mixed. There is no major data releases scheduled for today. 

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

 

 

DAILY REPORT : Tuesday 07 Aug 2018

MARKETS/MACRO The main theme overnight was seemingly resilient risk-appetite in the U.S despite the latest notch up in trade tensions. A Global Times editorial said China is prepared for a “protracted war” and doesn’t fear sacrificing shortterm economic interests. The U.S also resumed sanctions on Iran effective today followed by another set of tougher sanctions to begin in November targeting oil sales. For equities the Dow Jones Industrial Average edged up +39.60 points (+0.16%) to 25,502.18, the S&P500 advanced +10.05 points (+0.35%) to 2,850.40 and the NASDAQ Composite rose for a fifth straight session up +47.664 points (+0.61%) to 7,859.678. European stocks were not however as resilient the EuroFirst 300 index dipping -2.32 points (-0.15%) to 1,521.61 and the EuroStoxx 600 ticking down half a point (-0.13%) to 388.66. Regionally the DAX shed -0.14%, CAC40 -0.03% and FTSE100 crept up +0.06%. In the G10 space, we saw cable take a leg lower, sliding to a YTD low versus the USD below 1.2950, as the market shrugged off a statement from UK PM May’s spokesperson that May still believes a deal with the EU is the most likely outcome, and instead focused on weekend headlines that UK International Trade Secretary Fox believes there is a 60% chance of a no-deal Brexit. The yield on the U.S 10-year note fell -1.5bps to just below 2.94%, while earlier falls in the major European 10-year bonds were 1-3bps. Crude oil prices rose strongly amid warnings of falls to output from major producers. Reports emerged suggesting Saudi Arabia’s output had fallen in July to around 10.3m bbl/d, this is against a stated output level of 10.498m bbl/d in June. This is despite the kingdom agreeing to increase output at last month’s OPEC meeting to make up for losses elsewhere in the group.The re-imposition of sanctions on Iran following the move by the U.S to pull out of the Iran nuclear deal was also bullish. Finally strike action by workers in the north sea has seen output from Total’s operations impacted.

Secretary of State Mike Pompeo said the White House is ready to enforce sanctions against Iran that will be reimposed starting Monday — an effort by the U.S. to "push back" against Tehran's "malign activity". The renewed sanctions follow President Trump's decision in May to withdraw the U.S. from the multi-nation nuclear accord with Tehran. The 2015 agreement, known as the Joint Comprehensive Plan of Action, of JCPOA, brought a suspension of U.S. sanctions in exchange for Tehran's agreement to end its nuclear and ballistic missile programs. Trump has long contended that the Obama-era deal was flawed from the start and in his May announcement that the U.S. would withdraw, the president said the structure of the accord was "decaying and rotten". Washington has said the only way Iran could avert the sanctions would be to agree to new negotiations to abandon its missile and nuclear programs. In a televised address, Mr Rouhani said there could be no talks as long as Washington was reneging on the deal. "We are always in favour of diplomacy and talks.. but talks need honesty. Trump's call for direct talks is only for domestic consumption in America ahead of elections.. and to create chaos in Iran". European allies tried and failed to persuade Mr Trump not to walk out of the 2015 agreement, under which Iran agreed to curbs on its nuclear program in return for the lifting of international sanctions. 2

PRECIOUS On the first day after China imposed a 20% reserve requirement on CNY forward transactions, the desired effect of a fall in USDCNY never eventuated. Consequently, given the close correlation between gold and CNY and CNH recently, it also meant gold bulls were disappointed from the ongoing heavy gold price. Yesterday in Asia, there was decent buying seen at the Asia open which picked the gold up a few dollars before China came in. Half an hour after the SGE opened the spot gold jumped a few dollars to the intra-day high, as the initial move from the USDCNY after the fix was lower. The premium on the Shanghai exchange was improved and trading around $7 over spot, which prompted demand. It was not sustained however and the yellow metal began a very slow and orderly decline throughout the rest of the Asian day and the USDCNH and USDCNY headed higher in line with a soft Shanghai stock market. The premium pulled all the way back to the usual handle of $4 and demand continued to waiver into the European morning. The rising USD continued to weigh on the metal throughout London, falling as low as $1207 just prior to NY opening. There was a little respite early on in NY the metal pushing back through $1210 although it was short lived the metal dipping off into the afternoon and closing just off the daily lows. It still feels like a test of $1200 is imminent, with rallies over the past few days continually being sold into. We continue to watch the USD for direction of gold. Supports sit at $1204.50-1205.00 (July 2017 low + previous low) and then the $1200 psychological level, while topside resistance sits at $1220-25.

It was a quiet day today across markets, gold slowly tracking higher throughout. We opened at $1207.50 this morning and similar to yesterday saw some very light physical interest initially which held the metal in place. In the lead up to the Shanghai some bids surfaced and we pushed up towards $1209. The action on the SGE throughout the morning was fairly flat with the premium around that anchor level of $4 once again. Spot gold ticked sideways trading quietly throughout the remainder of the morning testing $1210 but running into resistance above there. Once the SGE closed we have traded above $1210, but there is a lack of demand to chase it higher at this stage. The USD has remained fairly flat so far, Asian equities are firmer at time of writing and crude is also a touch higher. Ahead today look out for German trade numbers and IP, UK house prices and U.S JOLTS report and consumer credit. 

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

 

DAILY REPORT : Wed 01 Aug 2018

MARKETS/MACRO US equities closed out a strong month on a positive note, with the three major bourses closing higher on the news that the US and China were holding trade talks. The Dow added 108.36 points, or 0.43%, to 25,415.19, the S&P 500 rose 13.69 points, or 0.49%, to 2,816.29, while the Nasdaq gained 41.784 points, or 0.55%, to 7,671.789. There were wins for industrials (+2.12%) and REITs (+1.89%) while telecoms (-0.77%) led the laggards. European equities were higher, the EuroSTOXX rose 0.69 points, or 0.18%, to 391.61, the German DAX crept up 7.3 points, or 0.06%, to 12,805.50, and the London FTSE 100 advanced 47.91, or 0.62%, to 7,748.76. In the currencies, the US dollar index put on 0.22% to 94.556, the EUR was as high as 1.1740 before being sharply sold to 1.1686, while USD/JPY surged to 111.93 on the news that the Bank of Japan intends to keep interest rates low for an extended period. US treasury yields were mixed, the 2 year yield firmed 0.81 bps to 2.6694% while the 10 year yield eased 1.30 bps to 2.9598%. Oil prices were lower, Brent shed 1.77% to $74.21 while WTI slipped 0.38% to $68.50. Base metals were mostly higher, with zinc (+2.66%) leading the gains. In US economic data, the employment cost index rose 0.6% in the second quarter, following a 0.8% increase in the first. Consumer spending increased 0.4% in June after a 0.5% rise in May. The personal consumption expenditure (PCE) index, the Fed’s preferred inflation gauge, rose 0.1% in June, while the core PCE index also rose 0.1%. The Case-Shiller national home prices index rose a seasonally adjusted 0.4% in May and is up 6.4% over the last 12 months. The Chicago PMI rose 1.4 points to 65.5 in July, the highest reading in 6 months. The consumer confidence index rose to 127.4 in July from a revised 127.1 in June. . In Asia today, as I write the Nikkei is at +0.90%, the Shanghai composite is at -0.22%, the Hang Seng is at -0.03%, and the ASX S&P 200 is at +0.08%. On the data front, tonight we have ADP employment, Markit manufacturing PMI (final), ISM manufacturing index, construction spending, FOMC announcement, and motor vehicle sales out of the US; and Markit manufacturing PMI (final) out of the Eurozone.

PRECIOUS Gold opened at $1221 in Asia and remained between $1219-23 in fairly thin trading. The SGE premium was slightly higher at $1-2 and we saw some decent buying when the market dipped below $1220. After some up and down movement following the Bank of Japan interest rate news, USD/JPY broke higher and gold was sold to $1217 during the London AM session. NY was where the real action happened, gold initially popped to $1222 before sweeping $7 to the session low $1215. As the US-China trade headline hits, USD/CNH 2 plummets and gold rebounds back to $1222. As USD/CNH moves lower again, the yellow metal rockets to the days high $1227 and is quickly slapped down. Despite the range in NY trading, gold closes slightly higher at $1223. Silver tested the previous days low at $15.36 before peaking at $15.59 in NY. Platinum was the pick in the PGMs, adding 1.2% for the session. The Philadelphia gold and silver index added 0.80%. SPDR Gold Trust holdings were unchanged at 800.2 metric tonnes. In Asia today, gold opened at $1224.10 and was testing $1220 by the time China came in. The SGE premium was stable at $1-2 and there was enough buying interest to see the market return to $1224. The yellow metal has softened through the afternoon, posting the low of $1219.80 as USD/JPY trades above 112. Gold is at $1220.90 as I write. Silver has drifted steadily lower since the open and is sitting at $15.40 as I write. Palladium is under pressure in late Asian trading, the metal is sitting right on the low at $925 as I write.

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

DAILY REPORT : Friday 10 Aug 2018

MARKETS/MACRO US equities finished mostly lower after a late sell off. The Dow lost 74.52 points, or 0.29%, to 25,509.23, the S&P 500 slipped 4.12 points, or 0.14%, to 2,857.70, while the Nasdaq crept up 3.45 points, or 0.04%, to 7,891.78. There were wins for telecoms (+0.98%) and materials (+0.50%), while energy (-0.89%) and industrials (-0.57%) led the laggards. European equities were mostly higher, the EuroSTOXX rose 0.36 points, or 0.09%, to 390.05, the German DAX gained 42.57 points, or 0.34%, to 12,676.11, and the London FTSE 100 fell 34.88, or 0.45%, to 7,741.77. In the currencies, the US dollar index climbed 0.54% to 95.60, the EUR traded down to 1.1526, while USD/JPY got as high as 111.16. US treasury yields were lower, the 2 year yield shed 2.3 bps to 2.6452% while the 10 year yield eased 3.4 bps to 2.9258%. Oil prices continued to fall, Brent lost 0.40% to $71.99 while WTI sold off 0.36% to $66.70. Base metals were mixed, with aluminium (-1.33%) the biggest mover. In US economic data, the Labor Department reported that the producer price index came in flat for July after a 0.3% increase in June. The figure was a little soft compared to economists forecast of a 0.2% gain. Core PPI, which excludes food, energy, and trade margins, grew by 0.3%. Weekly jobless claims fell 6k to 213k in the week ending August 4, continuing claims rose by 29k to 1.76 million. In Asia today, as I write the Nikkei is at -1.35%, the Shanghai composite is at -0.30%, the Hang Seng is at -0.89%, and the ASX S&P 200 is at -0.30%. On the data front tonight, we have CPI and Federal Budget numbers out of the US.

PRECIOUS Gold opened at $1213 in Asia remained stuck between $1212-16 for most of the day. The SGE premium eased slightly to $2-3 but we did see subdued buying action in Asia as USD/JPY eased. The market touched $1216 in late Asian hours but was rejected, London were happy to sell into this weakness and gold printed the session low $1210 in the AM session. There was a rebound back to the opening level before a pop up to the day’s high $1216.70 just after the NY open. It was all downhill from here as broad US dollar strength so the yellow metal sold into a close at $1212. Silver dipped to $15.33, traded up to $15.50, and finished flat. PGMs were largely unchanged. The Philadelphia gold and silver index rose 0.09%. The SPDR Gold Trust holdings were unchanged at 786.08 metric tonnes. In Asia today, gold opened at $1212.20 and was dead for most of the today with the SGE premium around $2-2.50. In the late afternoon, heavy losses for the Turkish lira and Russian ruble have reverberated through the currency markets, with the EUR plunging to a 12 month low against the USD. Gold was sent tumbling to a low of $1206.30 and sits at $1207.60 as I write. Silver was sold to $15.30 and is currently trading only slightly above at $15.31. PGMs have been relatively immune to the sell off, trading only marginally lower.

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

DAILY REPORT : Monday 06 Aug 2018

MARKETS/MACRO China delivered a couple of surprises on Friday as markets awaited U.S jobs data. The PBoC reintroduced a 20% reserve requirement for FX forwards (giving risk a sudden boost) followed shortly after by an announcement of retaliatory tariffs on U.S imports (which saw the market turn more cautious). U.S equities traded well through the news though the Dow Jones Industrial Average rising +136.42 points (+0.54%) to 25,462.58, the S&P500 climbing +13.13 points (+0.46%) to 2,840.35 and the NASDAQ Composite advancing +9.33 points (+0.12%) to 7,812.015. European equities were equally robust the EuroFirst 300 rallying +10.13 points (+0.67%) to 1,523.93 and EuroStoxx 600 advancing +2.52 points (+0.65%) to 389.16. Regionally the FTSE100 leapt +1.1%, the DAX tacked on +0.55% and CAC40 rose +0.33%. Global yields finished a busy week with a modest trend higher as curves steepened, UST's generally lower across the curve Friday as lingering trade concerns led to a slight lift in safe-haven demand. In FX, much attention remained on USDCNH last week, with the pair consolidating around the 6.85 level at the start of the week before resuming its rise late in the week on the back of Euro weakness and a renewed flare up in trade tensions with the Trump mulling an increase in tariffs from 10% to 25% on $200bn of Chinese imports. We saw the pair shoot up to 6.89 late Friday with the market largely one sided before the PBoC announced the re-introduction of the reserve requirement rule on onshore FX Forwards, which has subsequently bought USDCNY (and USDCNH) back below 6.85. The move by the PBoC is akin to that back on 1 September 2015 to help stem CNY declines after the August devaluation. In effect, 20% of notional is locked up for a year with no interest, making it more expensive to short CNY.

Early U.S data for Q3 is pointing to a slowdown in growth momentum from a very strong Q2. The July ISM nonmanufacturing composite came in below market at 55.7 (last: 59.1, estimate: 58.6), with weakness evident across a range of sub components. New orders, backlogged orders, supplier deliveries, export orders, and business activity all dipped. Separately, July non-farm payrolls of +157k suggests U.S labour market strength may have found a ceiling (last: +248k, estimate: +193k). However, June was revised up +35k leaving total NFPs in line with expectations, and with 32k workers getting laid off after Toys R Us’ insolvency, underlying momentum is probably stronger than the headline suggests. Other labour market data was stable, with average hourly earnings growth unchanged at 2.7% YoY, unemployment down -0.1% to 3.9% and participation flat at 62.9%. Overall, there is nothing here to deter the FOMC from its anticipated tightening path.

China's state media said on Saturday the government's retaliatory tariffs on $60 billion of U.S. goods showed rational restraint and they accused the United States of blackmail. Late on Friday, China's finance ministry unveiled new sets of additional tariffs on 5,207 goods imported from the United States, with the extra levies ranging from 5% to 25% on a total value of goods less than half of that proposed by U.S. President Donald Trump's administration. The response follows the Trump administration's proposal of a 25-percent tariff on $200 billion worth of Chinese imports.

PRECIOUS After hitting fresh lows during the European session on Friday, gold managed to bounce back fairly strongly post the softer than expected NFP number. The yellow metal opened during Asia on the back foot with ongoing selling seen from Japanese and Chinese banks and trading houses. The SGE premium was once again fairly stable throughout the morning session (~$4.00 for onshore traders), although with the USDCNH relentlessly pushing higher (6.9127 high) spot gold was under constant pressure. During the AM session we managed to hold above $1207, although with the surging USDCNH, the metal never looked like recovering back through $1210. We hit the intra-day low during the London hours of just over $1205, bouncing well off the $1204.60 support (July 2017 low pivot). China released the 20% reserve requirement news and not long after both CNH/CNY rallied strongly (6-7 big figures). Gold and silver recouped the Asia/European losses quite quickly to trade back above $1210 and $15.30 and the miss in the NFP's also assisted sentiment - with a number media outlets acknowledging that the U.S is beginning to slow down. Gold hit a peak of $1220 during NY, before some intra-day profit taking and producer selling took us lower into the close. It still feels like a test of the psychological $1200 level may be on the cards in the near future, but given how short specs are on COMEX, we wonder whether a fall through that level will have legs or just be a good buying opportunity. Elsewhere, CME Group reported that metals volume rose 17% YoY in July to average 642,000 contracts per day and Gold futures and options saw a +16% YoY increase in average daily volume to 397,000 contracts.

It was a reasonably quiet day for the metals today, once again being pushed around via moves in the USD, particularly USDCNH and USDCNY. The gold happily jobbed around $1213-15 this morning in the lead up to the SGE open, on moderate volume. By the time the SGE opened for business USDCNH had come off -1.5 big figures and was very choppy, with wide spreads. This gave the gold some upward momentum to start the day, only increasing when the USDCNY fixed and was slammed 2 big figures lower to 6.8010. The yellow metal hit a peak of $1217.80, before some light producer supply began to emerge and hold things in place. USDCNH and CNY backtracked from there and the gold could not maintain its momentum, pushing back towards $1215-16 and trading quietly. The SGE is currently closed for lunch and the market remains quiet. Asian equities are generally higher, the Hang Seng +0.7%, Nikkei +0.1%, ASX200 +0.49%, while the Shanghai Composite is bucking the trend down -0.75%. The dollar is generally a little firmer across the majors and flat vs. CNY and CNH. Crude and Brent are currently higher up +$0.20-0.30 from the open.

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.

DAILY REPORT : Tuesday 31 July 2018

MARKETS/MACRO US equities were lower as turmoil in the tech sector continues to weigh on the markets. The Dow lost 144.23 points, or 0.57%, to 25,306.83, the S&P 500 fell 16.22 points, or 0.58%, to 2,802.60, while the Nasdaq dropped 107.420 points, or 1.39%, to 7,630.000. There were wins for telecoms (+1.95%) and energy (+0.84% while tech (-1.78%) and industrials (-0.94%) led the laggards. European equities were lower, the EuroSTOXX shed 1.16 points, or 0.30%, to 390.92, the German DAX sold of 62.20 points, or 0.48%, to 12,798.20, and the London FTSE 100 edged lower 0.46%, or 0.01%, to 7,700.85. In the currencies, the US dollar index eased 0.33% to 94.358, the EUR climbed to 1.1717 ahead of the GDP and CPI data release form the Eurozone tonight, while USD/JPY was as low as 110.92. US treasury yields were mixed, the 2 year yield lost 0.81 bps to 2.6613% while the 10 year yield firmed 1.86 bps to 2.9728%. Oil prices were higher as tensions in the Middle East increase, Brent rose 0.86% to $74.93 while WTI climbed 2.10% to $70.13. Base metals were mixed, with zinc (-1.50%) registering the biggest move. In US economic data, the NAR pending home sales index rose 0.9% to 106.9 in June following a 0.5% decline in May. In Asia today, as I write the Nikkei is at +0.04%, the Shanghai composite is at +0.26%, the Hang Seng is at -0.44%, and the ASX S&P 200 is at +0.03%. On the data front tonight, we have employment cost index, personal incomes, consumer spending, core inflation, home price index, Chicago PMI, and the consumer confidence index out of the US; and GDP, inflation, and unemployment figures out of the Eurozone.

PRECIOUS Quiet night for the precious as gold remains within a tight range. Gold opened at $1222 in Asia and drifted to the session low of $1218 as China came in and USD/JPY traded above 111. The SGE premium was around $1-1.50 which prompted light selling from the Chinese banks. London bought the metal up to opening levels as the EUR found support. Gold hit the day’s high $1224 in early NY trading as the EUR/USD pushed through 1.17. NY turn sellers at this point, the yellow metal drifted lower through the afternoon to close all but flat at $1221. Silver dipped in Asia but recovered to close slightly in front at $15.47. PGMs were rangebound also, with platinum and palladium closing at $827 and $929 respectively. In Asia today, gold opened at $1221.30 and printed the high of $1223.10 early on, it has remained within a $5 range through the rest of the day. The SGE premium is still $1-1.50 and flows from China have been limited. The yellow metal reached the day’s low of $1218.50 in late Asian hours as USD/JPY was bolstered by news that the Bank of Japan intends to keep interest rates low for an extended period of time. Gold is sitting at $1219.00 as I write. Silver under late pressure and is sitting right on the low of $15.39 as I write. PGMs are flat.

 

Although the information in this report has been obtained from and is based upon sources 1StopGold believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute 1StopGold' judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of an investment. This report does not consider or take into account the investment objectives or financial situation of a particular party.