Fischer Not Yellen Caused Friday’s Sell-OffWednesday August 31, 2016 08:14
(Kitco News) - Friday’s trade after Yellen’s comments went to script. Yellen suggested that data points were moving towards the Fed’s targets and interest- rate increases were under consideration, if the economy continued to improve. On the face, it appeared somewhat hawkish and the market responded accordingly with a quick sell-off. The feel of the initial remarks gave the impression that although the desire was there, September was probably not in play. The market snapped back and gold traded up near the week’s high. Then along came Vice Chair Fischer suggesting that if nonfarm payrolls this week was again a strong number, September was in play. The reaction began in the foreign exchange market, with the dollar surging and renewed selling pushed gold to the $1,317-$,1320 support range. We must now endure another week of economic data, with the focus primarily on Friday’s job data. The market has not priced in a September hike and is vulnerable to further lifting of weak long positions. We continue to believe that September remains off the table. Will need to watch the dollar for direction, but the $1,315 level needs to hold or a test of the $1,307 area is in play. Last week of August. Markets very thin and moves will continue to be exaggerated.
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By Peter Hug, Kitco Metals Global Trading Director; email@example.com