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BBH: Dollar, Treasury Yields Back Off; Data Undershooting Expectations

Kitco News

The U.S. dollar has given up some of its recent gains and Treasury yields have fallen back, with some apparent cooling of the U.S. economy, although expectations remain for another Federal Reserve rate hike in September, says Brown Brothers Harriman. “The forces that had pushed the U.S. 10-year Treasury yield to 3% and the dollar above JPY113 at the start of the month, and the euro to $1.13 a couple of weeks ago, have dissipated,” BBH says. “The 10-year yield is near 2.80%. The dollar was near two-month lows against the yen a week ago, and the euro was back toward the middle of its previous $1.15-1.18 trading range.” U.S. economic data has been undershooting expectations lately, BBH says. The market will monitor trade, income and personal spending, and revised gross-domestic-product data this week. “The trade deficit narrowed in Q2 but the effort to beat the sanctions appears to have faded,” BBH says. “The risk is that the combination of growth differentials and the dollar's recovery spurs deterioration in Q3.  Consumption rose at a 4% clip in Q2, according to the preliminary GDP estimate. It is unsustainable. A slowdown should be evident in the monthly personal consumption data….Growth seems to be moderating toward a more sustainable pace, still juiced by fiscal stimulus and deregulation.” Still, BBH adds, neither U.S. President Trump's criticism of Federal Reserve policy nor Fed Chair Jerome Powell's Friday speech has altered investors' view that a September rate hike is nearly a “foregone conclusion,” with 90%-plus odds.

By Allen Sykora of Kitco News; asykora@kitco.com

 

MKS: $1,200 Key Technical Level For Gold Prices

Monday August 227, 2018 08:31

The $1,200-an-ounce level is a key chart point for gold, says MKS (Switzerland) S.A. The metal has traded on both sides of this in the last week and was up 20 cents for the day to $1,205.50 an ounce shortly before 8 a.m. EDT. “The metal will look to hold the $1,200 figure to entice interest for a leg higher, while support underneath the psychological level will be evident toward $1,185-$1,190,” MKS says. One positive for gold is the recent reduction in global exchange-traded-fund selling, with outflows of only 10,000 ounces recorded on Friday, MKS adds. 

By Allen Sykora of Kitco News; asykora@kitco.com

 

John Gross: Last Week's Bounce In Metals Due To Softer Dollar, Technicals

Monday August 227, 2018 08:31

A number of precious and base metals likely rose last week due to a combination of a softer U.S. dollar and technical considerations, with metals viewed as “oversold,” says John Gross, president of the management consulting firm J.E. Gross & Co. He notes that silver posted its first weekly gain following 10 consecutive weekly losses, gold had its first weekly advance after six weekly losses, and copper has scored just two weekly gains over the past 11 weeks. Most will say the bounces were due to a weaker dollar, Gross says. “But there is another element, a bit more esoteric, that also contributed to metal prices moving up,” he explains. “Over the past several weeks, or in some cases, months, metal prices fell sharply, putting them deep into ‘oversold territory’ on a technical basis. Whether one measures oversold by the Relative Strength Index, by Stochastics, or just by visual observation, a correction could be expected, and it finally came. So, was it the dollar influence that moved the markets, or was it due to technical considerations? We suspect it was a bit of both, but we will learn more in the coming weeks.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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