DAILY REPORT : Wed 12 July 2017

MARKETS/MACRO: U.S. stocks were very choppy on Tuesday as traders debated the significance of emails released by Donald Trump Jr on Russia. The Dow, despite having a 160+ point range on the day, was largely unchanged tacking on +0.55 points, or 0%, to 21,409.07. The S&P 500 lost -1.90 points, or -0.08%, to 2,425.53 and the Nasdaq rallied +16.912 points, or +0.27%, to 6,193.305. The best performing sectors were Energy (+0.53%) and Tech (+0.36%), while Financials (-0.68%) and Telcos (-0.67%) struggled. European stocks finished generally lower, as investors took a cautious approach ahead of U.S. Federal Reserve Chairwoman Janet Yellen’s testimony to Congress. The FTSE Euro First 300 Index slid -10.16 points, or -0.68% to 1490.61 and the Euro Stoxx 600 retreated -0.65%, or -2.49 points to 379.15. Regionally the DAX lost -0.07%, FTSE100 -0.55% and CAC40 -0.48%. August WTI added +$1.31, or +2.95% to US$45.71 a barrel as the EIA cut its forecast for US production in 2018 from just over 10 million barrels a day to 9.9 million. This is the first reduction in estimated US supply for 2018 since the EIA started making predictions for that year in January. The dollar edged broadly lower yesterday as we head into Yellen’s testimony this evening. The USD’s soft tone wasn’t helped by comments from the Fed's Brainard who advocated moving cautiously on further rate hikes. Treasuries rallied and the curve steepened, led by dovish tones from two Fed speakers. The 2y note yield slumped -0.79bps to 1.3751% and the 10y bond yield declined -1.25bps to 2.3605%.

On the data front, job openings in the U.S. decreased -301k to a seasonally adjusted 5.7 million (5.95 million expected) according to the Labour Department in its monthly JOLTS survey. The drop pushed the jobs openings rate to 3.7%, the lowest reading this year, from a nine month high of 3.9% in April. Hiring jumped to 5.47 million from 5.04 million the prior month. There were broad increases in hiring from manufacturing to retail and professional and business services.

Fed Governor Lael Brainard spoke about the normalisation process of central banks, and her comments on the US were on the dovish side (she is a known dove however). She noted that currencies will be more sensitive to interest rate moves compared to balance sheet normalisation. In terms of her current views, she said that, “I consider normalisation of the federal funds rate to be well under way. If the data continues to confirm a strong labour market and firming economic activity, I believe it would be appropriate soon to commence the gradual and predictable process of allowing the balance sheet to run off. Once that process begins, I will want to assess the inflation process closely before making a determination on further adjustments to the federal funds rate in light of the recent softness in core PCE (personal consumption expenditures) inflation. In my view, the neutral level of the federal funds rate is likely to remain close to zero in real terms over the medium term. If that is the case, we would not have much more additional work to do".

PRECIOUS: Gold and silver once again showed some respite from the recent sell-off, posting gains for a second straight session, aided by a sinking USD. Gold opened just under $1215 yesterday and was under steady selling pressure throughout most of the Asian day. USDJPY was firm throughout the morning trading just short of 114.50 which kept the metals on the backfoot. There was a very quick spike higher right around the Tocom open, gold very briefly trading above $1215, although this was met with decent selling from Comex. Throughout the morning the metals continued to slide gold dipping below $1210 around the time Europe walked in and silver edging below $15.50 before steadying back above these respective levels. After a very dreary first half of the day the metals fortunes began to change, with headlines of alleged ties between Donald Trump Jr and Russian officials drawn out in further detail. The president’s oldest son — in a surprise Tuesday tweet — shared what he said was a full email chain from June 2016, detailing his plans to set up a meeting with a Russian government lawyer who was willing to share damaging material about Hillary Clinton. The smoking gun in the email, according to the attorneys, is the wording throughout the emails that Trump Jr. exchanges with a broker for one of his father’s former Russian business partners. At one point, Trump Jr. responds “love it” at the prospect of material that would “incriminate” Clinton. This saw stocks tank and safe-haven assets rally, gold quickly angling from $1210 to $1217. Brainard's dovish comments on Fed rate hikes only helped the cause with the yellow metal pushing up against $1218 for the final hours of the session. Silver followed gold for the most part although was under more selling pressure from China - as longs continued to unwind aggressively on the SGE for a second day. It based just under $15.50 and continued to grind higher into the close, finishing up around $15.80. For gold support sits between $1195 - $1200, close to the March 2017 lows while resistance will be heavy towards the 200 dma ($1230.00).

The dollar sold off this morning which continued to lend support to gold, the metal nudging against the NY highs in the lead up to the Tocom open. Some initial Japanese demand took spot gold through the overnight highs to test $1220. There were some sizeable offers in August Gold however which kept things in check. USDJPY after teetering just beneath 114.00, succumbed to heavy liquidation from leveraged and retail names and it was one direction until the early afternoon, trading as low as 113.32. The slightly lower USDCNY helped to bring a bit of buying back into the SGE after a week characterised by liquidation. Once the exchange opened spot gold lurched through $1220 again although didn't make it that far through touching $1220.20 bid before consolidating between $1218.50-1220.00. Silver popped higher right on the SGE open through $15.90 and maintained a $15.90-95 range for most of the afternoon with some decent volumes going through Comex and the SGE there. In other markets equities were lower the Shanghai Composite -0.2% at time of writing, Nikkei -0.5%, ASX200 -1.0% and the Hang Seng the outlier, currently up +0.8%. USD remains weaker across the board, at this point most dramatically vs the JPY, with USDJPY down -0.45% at 113.42 currently. Crude is flat on the day WTI sitting at $45.77. Ahead today markets will be focused on Yellen's congressional hearing, UK employment, Euro zone industrial production and and the BoC rate decision.

 

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 6 July 2017

MARKETS/MACRO: U.S. stocks were generally higher on Thursday, inching higher after a weak start, with tech stocks attempting to snap a 3 day losing streak. The Dow Jones Industrial Average was fairly flat down -1.10 points, or -0.01%, to 21,478.17, the S&P500 advanced +3.53 points, or +0.15%, to 2,432.54 and the Nasdaq rallied +40.795 points, or +0.67%, to 6,150.855. The best performing sectors were tech (+1.04%) and healthcare (+0.54%), while energy (-2.01%) and REITs (-1.21%) were the laggards. European stocks rose for the second time in three days as a rally in financial services companies and retailers offset declines in the oil and gas names. The FTSE Euro First 300 index crept up +1.49 points, or +0.1% to 1,505.34 and the Euro Stoxx 600 index gained +0.69 of a point, or +0.18% to 382.99. Regionally the DAX was lifted +0.13%, FTSE100 +0.14% and CAC40 +0.1%. Oil prices collapsed yesterday as the U.S. opened following 8 straight days of gains, with investors taking a glass half empty approach to events in the market. Reports that Russia was against any proposal to deepen production cuts wasn’t taken kindly by investors, with futures selling off right from the opening bell. The move also suggests that last week’s gains were probably more due to short covering than any fundamental shift in sentiment. The focus will return to inventories this week, with the market expecting a draw-down of 2 million barrels (BBG survey). August WTI crude slumped -$1.84, or -3.9% to US$45.23 a barrel and closed a touch higher at $45.61. Treasuries rallied as the FOMC minutes came largely in line, with the notable hawkish surprise being the apparent willingness to start the balance sheet process in July vs the assumed September. The 2y note yield fell -0.38bps to 1.4063% and the 10y bond yield declined -2.49bps to 2.3249%.

On the data front new orders for U.S. made goods fell farther than expected in May, although this was evened out with slightly stronger orders for capital goods suggesting manufacturing remains on a moderate growth path. Factory orders fell -0.8% in May (-0.5% expected) from -0.3% a month earlier and Durable goods orders improved slightly down -0.8% as expected, better than the -1.1% prior read. The Commerce Department also noted that orders for non-defense capital goods excluding aircraft – seen as a measure of business spending plans - rose +0.2%, improving from the prior -0.2% read. The minutes from the June FOMC meeting down played recent inflation weakness, noted risks related to financial stability, and suggested that the easing in financial conditions strengthened the case for rate hikes. The minutes also appeared to indicate that some members favoured a July announcement of balance sheet normalisation, while others preferred to wait until September. Economic activity was characterised as “rising moderately on average”, with international risks appearing to “recede further.”

Tensions between Washington and North Korea continue to intensify with leader Kim Jong Un vowing his nation will never put its weapons programs up for negotiations, a day after test-launching its first inter-continental ballistic missile (ICBM). The rhetoric suggests more tests are imminent as the country works to perfect nuclear armed missiles capable of striking farther distances. The U.N. Security Council has just concluded an emergency open meeting regarding the aggression. U.S. Ambassador to the U.N. Nikki Haley told the constituents N Korea was "quickly closing off the possibility of a diplomatic solution" and the United States was prepared to defend itself and its allies. “One of our capabilities lies with our considerable military forces. We will use them if we must, but we prefer not to have to go in that direction" she said.

PRECIOUS: Gold hit a new cycle low overnight at $1217.80 during the early NYK hours, yet came back to close just off the Asia highs at $1227. Gold began the day in Asia around $1223.50 and some more provocative comments by North Korea began to hit the wires. Things like Kim Jong Un was prepared to send 'many packaged gifts to the US' for their independence day celebrations. This sent USDJPY south from 113.30 to 112.80 and gold off towards $1229.00. SGE traders, after being very dormant for the past few sessions, came out of the the blocks firing and were good buyers over the AM session. The premium approached $10 for onshore traders throughout the morning which was up a $1 or so from prior sessions and remained there into the lunchtime close. As the USDJPY started to bottom out, some offers began to appear in August gold. There was still good buying from Asian names on the way down but gold continued to slide into the European session. This continued into the NYK open, gold falling sharply in line with a plummeting oil price, tripping stops through $1220 and posting a fresh low of $1217.80. Gold then slowly and steadily turned around from there. The FOMC minutes announcement that 'the committee was unable to reach an agreement in June on the timing of the balance sheet reduction' prompted gold and silver higher again towards $1227 and $16.10 respectively. Gold sits now close to some fairly important levels to the downside, $1214.25 being the May low, followed by $1195-1200 which mark a series of troughs in March. To the topside the 200 dma is the first resistance which cuts in around $1231.50. For now we continue to watch the Yen, Gold's correlation with the currency remaining very strong at 0.78 on a rolling daily basis past 3 months.

This morning gold was quite volatile early on in what were very thin conditions. After opening around $1227 and initially falling off a few dollars the market was aggressively swept back higher to touch $1229 before easing back off. For a second day in a row there was heavy Comex offering ahead of $1230 (cash), with some chunky orders visible there. The metal dipped and then came back higher leading into the SGE open, with traders expecting there to be decent demand there similar to the previous day. It never emerged however, with light neutral trade experienced on the exchange. Some macro offers then swiftly brought the market lower and we continue to trade a $1224-27 range into the early afternoon. Traders next event to focus on will be Friday's NFP figures, which always have the potential to provide fireworks. Until then though we see the metal consolidating between $1215-35. In other markets equities were softer, Nikkei currently leading the decline off -0.55% on the day, the Hang Seng is -0.25%, Shanghai Composite -0.3% and ASX200 -0.05%. The dollar was reasonably subdued, moving most against the yen (USDJPY -0.25% @ 112.98 last) and was mixed. Crude bounced back from yesterday's rout the August WTI currently sitting at $45.50, up +$0.35 or +0.75% on the day.

 

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 30 Jun 2017

MACRO: US equities were well lower as tech shares took a solid beating. Despite being a leading light this year as the US markets made their record run, the tech sector has weakened significantly in recent weeks. It's worth noting also that Thursday was the second to last trading day in the quarter, a time during which investors often look to reposition their portfolios or take profits. The Dow lost 167.58 points, or 0.78%, to 21,287.03, the S&P 500 slipped 20.99 points, or 0.86%, to 2,419.70, and the Nasdaq plunged 90.06 points, or 1.44%, to 6,144.35. Financials (+0.65%) and energy (+0.12%) were the better performers but were unable to cover the heavy losses in tech (-1.83%) and consumer staples (-1.17%). European shares were sharply lower as markets digest the more hawkish tone in recent comments from the ECB, the EuroSTOXX shed 5.16 points, or 1.34%, to 380.66, Frankfurt DAX fell 231.08, or 1.83%, to 12,404.00. The London FTSE 100 declined 37.48, or -0.51%, to 7,293.00. In currency markets, the greenback continues to soften as the US dollar index sheds 0.47% to 95.56, it's lowest reading since October 2016. The EUR traded up to 1.1443, a fresh 2 year high, while USD/JPY traded down to 111.86. U.S. Treasury yields were higher on the positive GDP print, the 2-year note yield added 1.59 bps to 1.3692%, the 10-year bond yield increased 3.7bps to 2.2648%. In commodities news, oil markets rallied for a sixth consecutive session, WTI crude added $0.15, or 0.34%, to US$44.89 a barrel, Spot Brent crude gained $0.30, or 0.21%, to US$47.41 a barrel. Base metals were broadly higher with aluminium (+1.0%) and copper (+1.0%) leading the charge. In US economic data, GDP expanded at a seasonally adjusted 1.4% annual pace in the first quarter of 2017, The figure was revised upward from a the earlier estimate of 1.2%. The change was mostly due to a revision in the consumer spending rate from 0.6% to 1.1%, consumer spending makes up more than two thirds of economic activity in the US. Initial jobless claims rose 2k to a seasonally adjusted 244k in the week ending June 24. Continuing jobless claims increased to 1.948M. In Asia today, as I write the Nikkei sits at +1.18%, the Shanghai composite is at -0.19%, the Hang Seng at -0.88%, and the ASX S&P 200 at +1.48%. Tonight we have personal income, consumer spending, core inflation, Chicago PMI, and consumer sentiment out of the US; Inflation data out of the Eurozone; and unemployment numbers out of Germany.

PRECIOUS: A range-bound session for the precious in the absence of any real catalyst for price action. Gold traded through $1250 soon after the open in Asia, and the elevated SGE premium at $11+13 saw Chinese buying push the market to the days high of $1253, though flows were lighter than in recent sessions. The yellow metal started to slide in late Asian hours as USD/JPY spiked, falling back through $1250 in London AM. Further selling saw the metal hit the days low of $1239 not long after the open in NY, however the rebound was fairly swift and gold closed out the session at $1245. Silver gave back the early Asian gains to finish the day lower at $16.58. PGMs closed marginally lower. The Philadelphia gold and silver index lost 2.4%. Gold ETFs bought 125k ozs overnight. In todays trading, gold has been range-bound between $1243-48 as the SGE premium has come off slightly to $10 above loco London. The yellow metal is sitting at $1243.80 as I write. Silver is trading sideways, the grey metal is at $16.62 as I write. PGM's are flat. Gold appears to be sitting in the middle of the range at present, lacking a catalyst for price action in any direction. Central banks seem to be moving toward a more hawkish view and the resulting rise in the bond yield curve is putting downward pressure on gold prices. The US dollar has softened, though this does not appear to have had the positive effect on price as we might have hoped. Even the geopolitical tension that has characterised the first half of 2017 has been somewhat more subdued over the last few weeks. The technical support at $1239 appears to be holding firm and we expect nearest resistance at this weeks high of $1254.

 

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 11 July 2017

MACRO: Consumer Credit in the U.S. expanded during May, rising to a seasonally adjusted 5.8% or USD $18.41 billion (exp: USD $13.50 billion), while April saw an upwards revision to USD $12.929 billion (prev: USD $8.197 billion). Revolving credit such as credit cards increased 8.7%, while non-revolving credit including auto and student loans added 4.7%. Equity markets in the U.S. opened the week with mixed results as investor's await earnings season. After recovering from early session weakness the DJIA pared gains late in the session to end just -0.03% lower at 21,408.52 points, while gains across technology (+0.82%) and materials (+0.62%) helped to support the S&P 500 +0.09% higher to 2,427.43 points. The renewed interest in the technology sector helped to underpin a +0.38% gain to the Nasdaq Composite. Oil futures managed to book modest gains on Monday, supported by news that Libya and Nigeria have been invited to join OPEC's meeting with other oil producers later this month. Both countries in recent times have increased oil production markedly, undermining the efforts of OPEC to limit production and ease the global supply glut. Following soft European pricing, WTI turned higher in New York to add around +0.3% and settle at USD $44.40 per barrel. Treasury yields in the U.S. eased back on Monday following recent gains, led by remarks from central bankers in Europe questioning the timing of the ECB's move toward normalisation. Softer 10-year yields out of Germany and France saw the U.S. following suit, with the 10-year yield cut 2.1bps to 2.371%. Markets across Europe turned higher on Monday, led by strong exports out of Germany and further strength to technology stocks. Exports out of Germany jumped +1.4% during May, the fifth consecutive monthly increase as demand from Asia, predominately China increased. The positive data release helped the German Dax end +0.46% higher, while the Stoxx Europe 600 added +0.38%. In the U.K. equities were supported by China's recent CPI release, underpinning a move higher in the big miners. The FTSE 100 ended the session +0.26% higher at 7,370.03 points.

PRECIOUS: Gold received some respite during U.S. hours on Monday, however not before the metal was ask to withstand a test toward USD $1,200 in Europe. Asian interest saw gold skew marginally to the downside, however bids on Comex around USD $1,210 kept the price action buoyant for the majority of the session. It wasn't until late in Asia that we saw a further leg lower, firstly moving through mild resistance at USD $1,210, while Friday's low print provided a brief period of support before offers overran the level. It was a steady grind higher for the remainder of the session, punctuated by a brief period of volatility leading into New York. Gold closed the session on a relatively positive note, consolidating back above USD $1,210, while further ETF outflows weighed upon further gains, with around 114k ounces of gold sold. Asia saw muted early session interest on Tuesday, with healthy underlying bids on Comex keeping price action buoyant toward US $1,215, albeit within a narrow range throughout the morning. A sharp spike leading into Shanghai trade saw the session high of USD $1,216.30 printed, while the metal spent the remainder of the session sliding back toward support around USD $1,210 leading into European trade. We continue to see interest around USD $1,210 restrict further weakness, while should this be broken we look to broad interest around USD $1,200 - $1,205. Silver saw a relief rally in New York on Monday as bargain hunters piled into the metal following a USD $15.20 low print in early Europe. Offers around USD $15.50 kept the metal underwater leading into U.S. hours, however the resistance soon gave way to see a USD $15.73 high, impressively ending the session above the Asian open. The grey metal pulled back from New York closing levels during Asian trade on Tuesday, seeing offers out of China test toward the USD $15.50 pivot point. We are seeing interest in the grey metal re-emerge following the recent decline, with support around USD $15.50 the short term key. Data releases tonight include U.S. Small Business Optimism, Wholesale Inventories and JOLTS Job Openings.

 

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 5 July 2017

MACRO: North Korea test fired its first intercontinental ballistic missile (ICBM) at around 9:40am local time on Tuesday. The ICBM is expected to have a range of at least 3,500 miles, meaning it would be able to reach Alaska. The US has requested a closed door meeting of the UN Security Council, expected to take place on Wednesday. US markets were closed for the 4th of July holiday. European shares were lower, the EuroSTOXX lost 1.11 points, or 0.29%, to 382.30, the Frankfurt DAX fell 38.18, or 0.31%, to 12,454.50. The London FTSE 100 shed 19.86, or 0.27%, to 7,308.5. In currency markets, the US dollar index added 0.14% to 96.326, the EUR traded down to 1.1340, while USD/JPY traded up to 113.30. In commodities, oil markets were narrowly mixed as Brent slipped $0.07, or 0.14%, to $49.61 a barrel, while WTI edged higher $0.01, or 0.02%, to $47.08 a barrel. Base metals were mostly lower, with nickel (-2.24%) taking the biggest hit. There was no economic data release from the US due to the holiday. In Asia today, as I write the Nikkei sits at +0.03%, the Shanghai composite is at +0.24%, the Hang Seng at +0.35%, and the ASX S&P 200 at -0.22%. On the economic calendar tonight we have factory orders and FOMC meeting minutes out of the US; with Markit Services and Composite PMI, and retail sales out of the Eurozone.

PRECIOUS: Quiet day for the precious as US markets close for the holiday. Gold opened at $1221 in Asia and traded within the $1221-1225 through the day as the SGE premium sat around $9 over loco London. The high of $1226 was printed during the PM session as USD/JPY dipped below 113. The yellow metal traded tight $3 range through London and NY hours, finishing the session at $1222. Silver gave back early Asian gains with a sharp fall during the day, and ultimately finished where it started. PGM's fared better, platinum put on 1% to close at $912 while palladium surged $15 to the high of $858. Gold ETF holdings were unchanged overnight. In today's trading, Gold was well bid through the AM as USD/JPY dropped below 113 once again. SGE premium creeping up to $9-10. The market printed a high of $1228.50 before slipping on the dollar rebound, the yellow metal is at $1225.90 as I write. Silver traded to a high of $16.19 and is sitting at $16.15 as I write. PGM's 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.

DAILY REPORT : Thursday 29 Jun 2017

MACRO: Pending Home Sales in the U.S. continued to slide during May, registering the third consecutive monthly decline according to the latest National Association of Realtors data. The NAR index declined -0.8% MoM (exp: +0.5%) to follow a downwardly revised -5.8% during April (prev: -5.4%). Pending sales were down -1.3% in the West, -1.2% in the South, -0.8% in the Northeast, while the Midwest was unchanged. The NAR's chief economist, Lawrence Yun commented with the release, "Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast." Equity markets in the U.S. recovered from previous session declines on Wednesday, led by strong performances to financial stocks as the 10-year yield continued to rally (2.22%). The DJIA added +0.68% to 21,454.61 points as J.P. Morgan helped to support the bourse with a +2.01% gain. The S&P 500 was led +0.88% higher by financials (+1.58%) and technology (+1.32%), ending the session at 2,440.69 points to post the largest single-session gain since April 24. The Nasdaq meanwhile recovered the majority of Tuesday's -1.61% fall, surging +1.43% on Wednesday to book the largest single-session gain since November 7. Oil futures recovered late in trade on Wednesday, jumping during New York hours following mixed data releases in recent days. The U.S. EIA reported on Wednesday that domestic crude production fell by 100,000 barrels per day to 9.25 million barrels per day during the week ended June 23, while U.S. domestic supplies edged up 100,000 barrels last week, a far cry from the 3.25 million barrel decline expected. WTI added just in excess of +1% to settle at USD $44.74 per barrel for a fifth consecutive session increase, while Brent crude jumped +1.4% to USD $47.31 per barrel. Equities in the U.K. were pressured lower by a stronger sterling on Wednesday, as the local currency found legs after BOE Governor Mark Carney said interest rates may need to increase should the U.K. economy continue to strengthen amid softer consumer spending. The benchmark FTSE 100 declined -0.63% to close at its lowest level since May 11, however declines were tempered somewhat by gains to energy and commodity stocks. In Europe markets ended trade modestly lower, seeing whippy trade amid a volatile EUR following comments from ECB Vice President Vito Constancio noting that President Draghi's recent comments did not state anything new that was not totally in line with the ECB's current policy. The Europe Stoxx 600 eased just -0.04%, however still booked the lowest close since April 21, while the German Dax slid -0.19%.

PRECIOUS: Gold spent Wednesday's session within a relatively narrow range, seeing uninspired trade hold the metal around the key pivot point of USD $1,250. Early Asian interest pulled the metal away from New York's soft close, edging back through USD $1,250 in Shanghai as physical demand out of the far East supported the price action. A modest bid tone in Europe saw the session high of USD $1,255 printed, while bid equities in New York restricted any further gains to see gold end the session generally unchanged at USD $1,250. ETF holdings ticked up modestly on Wednesday (100k ounces), while short dated vols continue to remain well offered. Asian hours on Thursday once again saw solid interest from the far East, dragging gold away from USD $1,250 in early pricing as the on-shore premium once again traded bid against loco London gold (USD $12). Ranges have narrowed leading into financial year end and while interest around USD $1,250 continues to keep the metal buoyant, any moves to the top-side are met with a wall of offers. Short-term support sits around USD $1,250, while below this the 200 DMA continues to prop up the market at USD $1,234.50. Silver continued to see interest in Asia today following Wednesday's +0.8% gain (from opening levels in Asia). The grey metal tested toward USD $16.90 as the greenback eased lower, now close to +3% higher in just over a week (21 June low of USD $16.37) and targeting a test of USD $17. After enduring whippy trade on Wednesday platinum is still struggling to consolidate around USD $920 - $925, while palladium held a tight range during Asian hours today, not straying far from USD $860. Data tonight includes German CPI, U.S. GDP, Personal Consumption, Core PCE, Initial Jobless Claims and Bloomberg Consumer Confidence.

 

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 10 July 2017

MACRO: Nonfarm Payrolls in the U.S. outpaced expectations during June, surging 222k (exp: 178k), while May's print received an upwards revision to 152k from 138k previously and April was improved to 207k from 174k. Healthcare was the largest contributor to the headline figure, adding 37k new positions, while professional and business services gained 35k payrolls and mining added 8k. The Unemployment rate unexpectedly ticked up to 4.4% (exp: 4.3%) from 4.3% previously as the participation rate improved to 62.8% from 62.7%. The broader 'U-6' measure of unemployment and underemployment, which includes those who have stopped looking and those in part-time jobs who want full-time positions increased to 8.6% from 8.4%. Despite the strong increase in payrolls the news wasn't all good as wage pressures remained muted. Average hourly earnings edged just +0.2% MoM higher (exp: +0.3% MoM), while May's increase was cut to just +0.1% MoM from +0.2% MoM. The June figure kept annualised wage growth steady at +2.5% YoY (exp: +2.6% YoY). The average work week ticked modestly higher to 34.5 (exp: 34.4) from 34.4 previously. Equity markets in the U.S. received a boost from the from robust June jobs report on Friday and a much need reprieve to battered technology stocks. The DJIA added +0.44% to end the session at 21,414.34 points, booking a +0.3% weekly return in the process. The S&P 500 was led +0.64% higher by gains to technology stocks (+1.25%) to scratch out a +0.1% weekly gain, while the Nasdaq jumped just over +1% on Friday to see a +0.2% weekly return. Oil futures continued to decline on Friday following data from Baker Hughes noting the number of active oil rigs in the U.S. had increased by 7 to 763 rigs last week. WTI handed back over -2% for the session, sliding to around USD $44.35 per barrel to end the week -4% lower. Brent Crude sunk -2.8% on Friday to USD $46.71 per barrel, closing the week around -4.2% down. Treasury yields in the U.S. were on the march higher on Friday following the payrolls release, sending the 30-year bond +3bps higher to 2.935%, the highest level since May 23rd. The 10-year treasury yield added +2.3bps to around 2.39%, while the 2-year gained +0.4bps to 1.41%. Soft trade to energy stocks and concerns following the ECB minutes release on Thursday kept European markets generally under water on Friday. The Stoxx Europe 600 (-0.07%) trimmed its weekly gain to +0.2%, while the French CAC eased -0.14% and the German Dax was able to edge into positive territory to close +0.06% higher. In the U.K. the FTSE 100 reversed early weakness to end the session +0.19% higher, supported by a softer sterling following weaker than expected Industrial and Manufacturing Production prints.

PRECIOUS: The firmer than expected payrolls release out of the U.S. send gold tumbling on Friday, ripping through stops around the previous low of USD $1,217.50 and having to wait until underneath USD $1,210 for supportive price action to emerge. There was limited interest out of Asia and Europe leading into the U.S. data release, while volumes spiked around the jobs figure, with macro players on the offer all the down to the session low of USD $1,207.60. A modest relief rally into the close saw gold close above USD $1,210, ending the session close to -0.7% down for a weekly loss of -2.4%. The latest COTR showed gold positioning decreased by 4.66 million ounces or roughly -31%, with net positioning currently at 10.53 million ounces or just 28.30% of the all-time high. The changes were made up of a 6.3% reduction in gross longs, while gross shorts leapt by 21.5%. With regards to ETF flows, gold saw outflows of over 190k ounces on Friday, predominately driven by U.S. based funds. A new week but a similar story for gold during Asian trade on Monday, with the metal failing to garner any interest from bargain hunters following Friday's rout. Initial offers on the Shanghai open tested toward USD $1,210 as the on-shore premium held above USD $10 against London pricing, however the figure saw decent bids on Comex to withstand a further move lower. It wasn't until late in Asia that we saw a further leg lower, firstly moving through mild resistance at USD $1,210, while Friday's low print provided a brief period of support before offers overran the level. Interestingly the USD only saw a mild uptick during the late Asian weakness, with price movement generally limited to the precious complex. Initial support for the metal now sits broadly between USD $1,200 - $1,205, while a break below here is likely to see support around USD $1,195 and below this USD $1,180. After clawing back the majority of the early session flash crash throughout Asian trade on Friday, silver swiftly reversed course to pare these gains following the U.S. payrolls release. The grey metal made a brief attempt at USD $16 in New York, however collapsed through the early Asian low of USD $15.44 soon after. A late session bounce flattered the scorecard to have the metal -1.9% lower at the close, however unable to hide the staggering -6.3% fall over the week. With regards to COTR positioning, silver fell by 54.94 million ounces or nearly -22% to 197.7 million ounces, around 33% of the all-time high. Gross longs eased marginally to reduce 1%, while gross shorts jumped 13.3%. The grey metal followed gold lower during Asian trade on Monday, moving through USD $15.50 in early Chinese pricing, however not deviating far from the figure for the majority of the session. As with gold, it wasn't until late in trade that the metal saw a further leg lower, crashing through Friday's low print to see USD $15.22 before bids emerged. The grey metal continues to trade friendless and surely it's only a matter of time before we see a 14 handle. Data releases today includes German Imports / Exports and U.S. 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 : Tuesday 4 July 2017

MACRO: US equities enjoyed a positive start to the second half of 2017 with the markets mostly higher on the back of a strong performance from the energy and financial sectors ahead of the July 4th holiday. The banks were buoyed by an uptick in treasury yields following the release of positive manufacturing data from the ISM. The Dow added 129.64 points, or 0.61%, to 21,479.27, the S&P 500 rose 5.6 points, or 0.23%, to 2,429.01, and the tech-heavy Nasdaq slipped 30.36 points, or 0.49%, to 6,110.06. There were wins for energy (+2.01%) and financials (+1.34%) while a continuing decline in tech (-0.85%) and losses for utilities (-0.54%) weighed on the markets. European shares enjoyed a strong rally as financials, energy and the miners outperformed. The EuroSTOXX put on 4.04 points, or 1.06%, to 383.41, Frankfurt DAX rose 150.19, or 1.22%, to 12,472.50. The London FTSE 100 advanced 64.37, or 0.88%, to 7,313.00. In currency markets, the US dollar index rallied 0.6% to 96.196, the EUR traded down to 1.1355, while USD/JPY traded up to 113.45. US treasury yields were higher on the upbeat manufacturing data, the 2-year note yield added 2.84 bps to 1.4101%, the 10-year bond yield increased 4.62 bps to 2.3499%. In commodities news, the oil market rally continued for an eighth consecutive session, the longest run of gains so far in 2017. Brent firmed $0.81, or 1.66%, to $49.58 a barrel, while WTI gained $0.96, or 2.09%, to $47.00 a barrel. Base metals were mixed, with zinc (+1.7%) the best performer and copper (-0.15%) leading the losses. In US economic data, the Institute for Supply Management manufacturing index rose to 57.8 in June from 54.9 in May. The reading exceeds economists forecasts of 55.6% and is the highest level since mid-2014. The new orders sub-index rose to 63.5 in June from 59.5 in May. The Commerce Department advised that construction spending was unchanged at an annual rate of $1.23 trillion in May. Economists had predicted a 0.3% decline. The April figure was also revised to show a 0.7% decline, rather than the 1.4% originally reported. Private construction spending fell 0.6% in May following a 0.2% decline in April. In Asia today, as I write the Nikkei sits at -0.28%, the Shanghai composite is at -0.57%, the Hang Seng at -1.70%, and the ASX S&P 200 at +1.55%. On the economic calendar tonight we have PPI data out of the Eurozone. No data releases from the US due to the Independence Day holiday.

PRECIOUS: Horror session for the precious ahead of the US 4th of July holiday. Gold traded at $1242 following the open in Asian hours, this would prove to be the highs of the day as the steady rise in USD/JPY made the market look increasingly soft as the session wore on. The SGE premium was at $9 and this was not enough generate much buying out of China, the metal drifting through the $1239-40 support that had held so well over the past couple of weeks. By London open we were sitting on the 200 dma at $1236, and gold gave up couple more dollars through the AM session. The slide picked up speed on the open in NY, the mid-morning manufacturing data release saw dollar/yen trade above 113 and the yellow metal touch $1219, eventually printing the low of $1218 just prior the close. Silver's trading day mirrored gold's, the grey metal opened at the high and gave up 60c to test $16.00. Somehow palladium managed to avoid the rout, closing flat at $843. The Philadelphia gold and silver index lost 2.19%. Gold ETF's sold 356kozs overnight. In today's trading, gold has oscillated within the $1221-1225 range, reaching the high of $1225.90 as USD/JPY slipped below 113. The SGE premium has remained relatively unchanged around $9 over loco London. The yellow metal sits at $1225.20 as I write. Silver traded to the day's high of $16.19 during the AM session before being dumped to $16.04, the grey metal has pared some of the losses and is trading at $16.10 as I write. PGM's are in positive territory, with palladium surging $15 to print the high of $858 before pulling back to $852 as I write. The increase in bond yields as central banks position to move away from accommodative monetary policy, coupled with the continued strength in equities is weighing heavy on the precious complex. We should see support around the May low of $1214 and below that a break through the $1200 level would be a catalyst for a move 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 : Wed 28 Jun 2017

MACRO: The S&P/Case-Shiller U.S. National Home Price Index showed home prices increased by less than expected during April. The 20-city index added 5.67% YoY (exp: 5.90%) from a 5.88% increase previously, putting further strain on inventories. The Conference Board reported on Tuesday that U.S. Consumer Confidence jumped to 118.9 during June (exp: 116.0) from 117.6 previously. The present situation index led the headline print higher to reach its highest level since mid 2001 at 146.3 from 140.6 previously, however the expectations index eased lower to 100.6 from 102.3 to mark the lowest level since January. The Richmond Fed manufacturing index strengthened during June, increasing to 7 (exp: 5) from 1 previously, led by gains to the shipments index and the new orders index. U.S. equities traded lower on Tuesday as uncertainty over the republican's ability to pass their new healthcare legislation spooked investor's and tech stocks reversed recent session gains. The DJIA sunk -0.46% to end the session at 21,310.66 points after reversing early session gains, while the S&P 500 cratered -0.81% as technology (-1.67%) and telecoms (-1.43%) led all component of the bourse lower with financials (+0.51%) the only exception. The Nasdaq meanwhile collapsed -1.61% as Google parent Alphabet sunk -2.62% following news that European Regulators had hit the company with a €242.2 Billion antitrust fine, while biotech stocks took a hit following news of the cancelled healthcare vote. Volatility was back on the agenda on Tuesday, with Wall Street's fear gauge the VIX Index spiking nearly +12% to mark the largest single-session increase in 6-weeks. ECB President Mario Draghi spoke in Portugal on Tuesday, hinting that the Central bank may pull back monetary stimulus measures as the economy accelerates. While not directly addressing the timing of withdrawal, Draghi highlighted the recent positive developments within the Eurozone, putting particular emphasis on reduced political uncertainty. European equities traded lower on Tuesday, led by weakness across telecoms and industrials, while a stronger EUR following Draghi's comments created headaches for exporters. The Europe Stoxx 600 led declines to hand back -0.79%, while the German Dax pulled back -0.78% and the French CAC sunk -0.70%. Currency majors posted gains against the Greenback on Tuesday, notably the EUR spiked nearly +1.5% to trade above 1.13 following Draghi's comments.

PRECIOUS: Precious metals recovered the majority of Monday's flash crash on Tuesday, seeing gold back above USD $1,250 as the Greenback took a leg lower. Early Asian weakness was reversed once China opened, pulling the metal away from support around USD $1,240, while interest on the European open saw the metal rip through stops around USD $1,250 to print a session high of USD $1,252.90. Pricing during U.S. hours saw the yellow metal back underneath the USD $1,250 pivot point, ending the session just underneath the figure in tight trade for a modest +0.33% gain. Vols have inched marginally higher over the last few days, seeing 1m just underneath 10 after trading in the high 8's briefly last week. Asian hours today saw gold trade with a modest bid bias, running into offers around USD $1,250 in early pricing, before breaking above the figure on the back of solid interest out of the far East. The Shanghai gold exchange saw the on-shore premium move higher once again, testing toward USD $12 over loco London gold and registering solid volumes. Gold looks to be stuck within a USD $1,238 - $1,260 range over the short term, with the 200 DMA underpinning the lower end of the range, while on-going political concerns in the U.S. and global geopolitical concerns support higher price action. After whippy trade on Tuesday in the New York, silver was able to climb above the U.S. high during Asian trade today, printing a USD $17.83 high, before easing into the European open. Platinum once again struggled to consolidate above USD $920 in Asia today, while palladium held firm around USD $860 following Tuesday's soft session. Data tonight includes German Import Prices, U.K. House Prices, U.S. Wholesale Inventories and U.S. Pending Home Sale

 

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 7 July 2017

MACRO: Initial Jobless Claims in the U.S. increased 4,000 to a seasonally adjusted 248,000 during the week ended July 1. The weekly print saw the four-week moving average edge 750 higher to 243,000, while Continuing Claims increased +11,000 to 1.956 million during the week ended June 24. Private sector job growth in the U.S. eased during June according to the latest ADP data, slowing to 158k (exp: 188k) from 230k previously. Mid-sized firms supported the headline print to add 91k payrolls, while large companies gained 50k and small companies lagged to add 17k. Data released by Markit Economics on Thursday showed the U.S. services sector increased at the fastest pace since January during June. The seasonally adjusted IHS Markit Services PMI jumped to 54.2 during June (exp: 53.0) from an initial read of 53.0 and a May print of 53.6. Supporting the headline print was a further upturn in new orders to mark the fastest rate of expansion since January, while input prices increased at the fastest pace in five years. Equity markets in the U.S. turned lower on Thursday, with investor's continuing to off-load technology stocks while keeping an eye firmly on geopolitical developments. The DJIA declined -0.74% to 21,320.04 points, while telecoms (-2.29%) and realestate (-1.88%) led all eleven sectors of the S&P 500 lower to have the bourse close -0.94% off the pace. The Nasdaq continued to suffer from recent rotation out of technology stocks, losing -1.00% to end the session at 6,089.464 points. Oil futures handed back gains late in trade on Thursday, finding support early in the U.S. session following an EIA report noting domestic crude supplies fell by 6.3 million barrels for the week ended June 30. Tempering the market reaction somewhat was the fact that U.S. crude production increased by 88,000 barrels per day to 9.338 million barrels per day. WTI touched a session high of USD $46.53 per barrel, however by the close was trading around USD $45.33 per barrel to book a -0.6% decline.

PRECIOUS: Gold tracked a relatively steady course on Thursday, broadly supported by a softer USD during European and U.S. hours to hold the support above USD $1,220. Asia opened with an offered bias in volatile early session pricing, pulling away from USD $1,230 in thin conditions as resting offers on Comex kept a lid on any top-side moves. Modest Chinese interest around the SGE open provided a brief period of support for the metal, however the bids waned once Shanghai exited for lunch to see the price action soften into European hours. Subdued trade out Europe was punctuated by a brief spike above USD $1,227 in early New York following the softer than expected ADP data, however a lack of follow through buying kept the yellow metal within a tight range into the close. In a relatively muted Asian session on Friday, the main talking point was a staggering early session collapse to silver, in what looks again likely to be a fat finger driven decline to follow that of gold just last week. The grey metal saw strange early session price action to trade well bid and gap around USD $0.15 to a session high USD $16.17. The bid tone didn't last long however, with somewhere between 30 - 50 million ounces sold on Comex to see the grey metal print a USD $15.60 low (after revision of futures low from CME). Much like gold last week, the metal failed to recover to the pre-crash level as it would be expected to do so if pricing was driven soley by an error. Much like silver, gold wiped away an early session bid tone to be sold lower as the events unfolded on Comex, losing close to USD $6 in a sharp sweep to support around USD $1,220. A modest bounce leading into Chinese trade failed to garner the interest necessary to support an further recovery, seeing gold precariously placed around the session low leading into European trade. All eyes tonight are undoubtedly on the U.S. Nonfarm payrolls, with a strong print potentially seeing gold test major support at USD $1,200. In the lead-up we see Manufacturing / Industrial Production from France and the U.K. as well as U.K. House Prices.

 

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 3 July 2017

MARKETS/MACRO: U.S. equities closed mostly higher on Friday as Wall Street capped a strong first-half performance - DJIA +8.0% and S&P500 +8.2% YTD. The Dow Jones Industrial Average on Friday rose +62.6 points, or +0.29%, to 21,349.63, the S&P500 inched up +3.71 points, or +0.15%, to 2,423.41 and the Nasdaq was the odd one out, down -3.931 points, or -0.06%, to 6,140.42. The best performing sectors were industrials (+0.76%) and consumer discretionary (+0.56%), while utilities (-0.12%), tech (-0.11%) and healthcare (-0.11%) bought up the rear. European equities retreated for a fourth day as a drop in financial and chemical stocks outweighed a rally in technology companies. The FTSE Euro First 300 index fell -6.53 points, or -0.44% to 1,491.37 and the Euro Stoxx 600 index relinquished -1.29 points, or -0.34% to 379.37. Regionally the DAX shed -0.73%, FTSE100 -0.51% and CAC40 -0.65%. Oil prices rallied higher as concerns about oversupply eased. Earlier in the trading session, the US Energy Information Administration (EIA) released its monthly supply/demand estimates for April, with output being revised down by 190k b/d to 9.08mio b/d. Other data showed drilling activity fell in the U.S. for the first time in 23 weeks, the number of drill rigs operating down 2 to 756 (Baker Hughes). This exuberance may be tempered by news over the weekend that Libya oil production hit another record however. In FX, USDJPY edged up slightly by +0.2% to 112.40 while AUDUSD was range bound last Friday and closed just a touch higher around 0.7690. The dollar index edged up 0.01% to 95.628. In treasuries the 2y note yield inched up +1.25bps to 1.3817% and the 10y bond yield rallied +3.71bps to 2.3037%.

On the data front U.S. inflation eased for the third consecutive month and consumer spending was tepid in May adding further complications for the Federal Reserve as it charts a course for interest rates. The Fed’s preferred measure of inflation, the price index for PCE, rose +1.4% in May YoY (+1.4% expected) from 1.5% a month earlier, the lowest level in six months. Excluding the often-volatile categories of food and energy, so-called core prices were also up +1.4% YoY, the lowest level since December 2015. On a monthly basis, the PCE deflator fell -0.1% (-0.1% expected) in May from an April read of +0.2%. The University of Michigan on Friday said its consumer sentiment index was 95.1 in June, up from a preliminary June reading of 94.5 but down from 97.1 in May. The details for the report were mixed, with current economic conditions rising to 112.5 in June from 111.7 in May, while expectations about the future were down to 83.9 in June from May’s 87.7. The overall sentiment index hit its lowest level since November. Elsewhere, consumer spending - which accounts for around two thirds of U.S. economic activity - was sluggish, rising +0.1% for May (+0.1% expected) according to the Commerce Department. This was down from a read of +0.4% a month earlier. Personal income rose +0.4% in May (+0.3% expected), up from a downwardly revised +0.3% a month earlier. Across the Atlantic Euro area inflation was a touch stronger than expected in June, at +1.3% YoY (+1.2% expected), with core inflation at +1.1% YoY (+1.0% expected). Within the index, services inflation, which accounts for 45% of the index, rose +1.6% YoY. The data hints that euro area inflation is continuing to base but remains a long way short of target 2%. It is evidence that the ECB’s policies are being successful, but not evidence that an early withdrawal of stimulus is warranted. The data complemented the tone of Draghi’s speech earlier in the week that deflationary risks are abating and reflationary forces are emerging.

PRECIOUS: With treasury yields and USDJPY grinding higher for the majority of the day last Friday, gold remained under pressure throughout although did manage to cling onto a $40 handle. In Asia we opened just below $1245 and initially pushed higher on the back of some early SE Asian retail demand. By the time the SGE came on line however we were trading back through $1245. A decent premium of above $10 on the exchange was quickly eroded as the USDCNY began to sell-off quite sharply. The premium traded to a low of $9 as a result and saw some gold demand drop off as the afternoon wore on. Buying out of China has certainly been slowing down over the past few months evidenced by fewer bullion imports, and this trend looks set to continue over the short to medium term. By the time London traders opened for business, the USDJPY began to show some signs of bouncing and gold had a leg lower towards $1240. Around the NYK open gold briefly dipped below $1239 (the 5th time this has happened in an hourly chart and ended as a shadow incidentally), yet recovered with some decent macro buying seen in the low $1240's and below. It was mainly light two way trade into the close between $1240-44 as U.S. traders wind down into independence day long weekend (holiday 4th July, although it is expected a number of participants will take the Monday off also). Ultimately the yellow metal closed around $1241.50. The yellow metal had a fairly lacklustre month, tumbling -2.15% in June as longs unwound. Things are certainly looking better for the half however, H1 gains now sitting around +7.75%. Silver was down -4.4% on the month and a stark -9.0% for the quarter, although retains a positive return for the calendar year of +4.3%. Palladium on the back of supply concerns continues to muscle its way higher, up +3.0% on the month, +6.1% for the quarter and an impressive +24.1% H1.

After opening around $1241.50 and making a brief tick up to $1242.50 the gold began a very slow descent over the course of the morning, with some fast money and macro traders looking for bids. The USD was also firmer across the board which added further momentum to the slide. China were fairly neutral on the SGE open but as the USDCNY began to tick higher the buyers retreated and spot gold lost some its morning support. There were bids sitting at $1240 which were given shortly after the SGE open and the metal fell through $1240 and failed to push back through that for the rest of the day. AUDUSD fell back towards 0.7665 after trading at 0.7695 earlier in the day and the USDJPY pushed back through 112.00 and traded up towards 112.60. Caixin China manufacturing PMI was released early afternoon and was a positive number at 50.4, taking the reading back into expansionary territoy (49.6 prior, 49.8 expected). This was another drain on gold as riskier assets benefitted from the strong numbers. Gold continues to look weak as I write trading down to a low of $1235.70 and silver $16.58. Ahead today there is not a great deal of activity expected with a number of American participants expected to be out for an extended long weekend. On the data front we have a number of European PMI's, Eurozone employment data and U.S. ISM manufacturing and construction spending.

 

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 27 Jun 2017

MARKETS/MACRO: U.S. equities traded generally higher Monday as a rise in the utilities and financial sectors helped offset losses from large-cap technology stocks. The Dow Jones Industrial Average crept up +14.79 points, or +0.07%, to 21,409.55, the S&P500 inched up +0.77 of a point, or +0.03%, to 2,439.07, while the Nasdaq slumped -18.10 points, or -0.29%, to 6,247.149. The best performing sectors were Utilities (+0.78%), Telco (+0.62%) and Financials (+0.53%), while the worst performing sectors were Tech (-0.59%) and Energy (-0.24%). European stocks were firmer, with banks doing the heavy lifting as Italy reached a deal to wind up two failed regional banks and Nestle climbed to a new record high after an activist investor urged changes at the company. The FTSE Euro First 300 index advanced +6.32 points, or +0.41% to 1,529.84 and the Euro Stoxx 600 index gained +1.43 points, or +0.37% to 389.05. Regionally the DAX rose +0.29% on the day, FTSE100 was +0.31% and CAC40 +0.56%. Weak U.S. durable goods orders lent support to the bond market overnight (the benchmark 10y UST yield falling below 2.12% at one point), as the low inflationary growth outlook persisted. On the day the 2y note yield fell -0.81bps to 1.3323% and the 10y bond yield edged down -0.88bps to 2.1335%. Oil prices remained broadly steady as the impact of investors selling abated. Exchange data showed that speculators had cut their net long positions in WTI and Brent to its lowest level in 10 months last week. Traders are also looking ahead to the EIA Energy Conference in Washington, where US shale oil producers are expected to give their view of current market conditions. April WTI crude ticked up for a third session adding +$0.40, or +0.93% to US$43.41 a barrel. FX markets remained fairly subdued overnight. In G10, there still appears a bias to be long USD especially vs EUR and JPY given how little is now priced through 2018. Investors will look to Yellen's speech tonight to see if she keeps up her defiant tone on the recent turn in US inflation & PCE on Thursday.

In Data overnight US durable goods orders disappointed, falling -1.1% MoM in May (-0.6% expected) after falling a downwardly revised -0.9% a month earlier. Meanwhile core orders fell -0.2% MoM (+0.4% expected), the data suggesting there may be some loss of momentum in the recent recovery in equipment spending. The German June IFO, which measures the business climate across manufacturing, trade and construction, rose to 115.1 (114.5 expected) after positing 114.6 in May, continuing the run of strong survey data for the euro area.

Over the past 24 hours, the Fed’s Williams and Dudley both hinted at a desire to continue normalising US monetary policy. Williams noted that, “some special transitory factors have been pulling inflation down…. But with some of these factors now waning, and with the economy doing well, I expect we’ll reach our 2% goal sometime next year”. Williams added, "Gradually raising interest rates to bring monetary policy back to normal helps us keep the economy growing at a rate that can be sustained for a longer time". Dudley stated that “Monetary policy makers need to take the evolution of financial conditions into consideration and when financial conditions ease – as has been the case recently – this can provide additional impetus for the decision to continue to remove monetary policy accommodation”. So, at least with regards to these senior Fed members, the message has not changed despite recent data hiccups. All eyes will be on Fed Chair Yellen's comments later today for more insight.

PRECIOUS: The talk of financial markets yesterday was the dramatic Comex led sell-off in gold, right around the time of the London open. In what is suspected to have been a 'fat finger' or erroneous trade in August gold, the metal plunged $20 from around $1254 to $1236.40 in a matter of seconds. Some 18,000 lots (1.8 million oz) were dumped on the market which triggered the rout and left traders scratching their heads as to the cause. Prior to this Asia had been somewhat smooth sailing, gold ticking up early on but failing to advance through $1260 (GCQ7). As the morning progressed the USDJPY steadily ground its way higher which kept gold on the backfoot, despite pockets of Asian buying on the way down. The metal meandered slowly lower and then held between $1254-56 throughout the Asia afternoon. The above mentioned sweep then occurred as early European traders manned their stations, thrashing the gold $20 lower in a matter of seconds as algo's etc kicked in. The posted low was $1236.40, just above the 200 dma ($1235.30), trading there very briefly before sharply rising back towards $1245. Some weak macro longs remained on the offer following the dip and capped any upside recovery beyond $1248. Vols went briefly bid on the sell-off lower, but sellers returned in the aftermath, particularly in the 1m-2m area. Gold 1m atm ol is 9.0, 3m 10.65, 6m 12.2, 12m 13.75. Gold had another dip in early NYK trade although this was quickly paid, returning to $1245 and trading around that into the close. In summary the gold managed to survive the brutal sell-off in London and not proceed lower, we do however think that the gold bulls confidence will be dented. Elsewhere, some worrying signs in the physical market emerged, with imports of gold into china from HK falling for a second consecutive month. During May 44.8 tons was imported, compared with 74.9 tons in April and 107.4 in March.

In Asia today traders where still trying to ascertain the reason for yesterday's sharp sell-off with a vast amount of media coverage on it, yet no clear reason. The metal had managed to refrain from falling further with some light Asian buying seen below $1240 and some technical profit taking orders seen ahead of the 200 dma (today $1234.90). Flows were modest this morning in Asia with caution from traders prevalent leading into the SGE and Tocom opens. Gold trickled gingerly lower into the SGE open, but once that opened some light buying was seen on the exchange which helped to push spot gold back towards the opening levels. The premium on the SGE remained at $8-10 over the loco London price which kept the bids active throughout the afternoon. Around the time London came in there was some decent buying seen through Comex. The market consequently sharply rose through $1247 all the way to $1252 in a matter of seconds, as stops were tripped. Since then we have held onto the 1250 handle with bids accumulating at that level. It will be interesting to see whether gold can continue higher today.

 

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