Intraday Market Thoughts

No Safety in Gold

by Adam Button
Aug 14, 2018 15:15

Gold attempts regaining the $1200 level after yesterday's break below the key level for the first time since March 2017. European indices are in the red while their US counterparts push higher. UK earnings came in within expectations while the unemployment rate dropped back to 4.0% from 4.2%. Cryptocurrencies resumed their damage as Bitcoin fell 3%, while Ethereum, Litecoin and Ripple fell 5-10%. The Premium short in FTSE100 was closed for 140-pt gain to compensate for the stopped out trade in gold. A new Premium note was issued on indices with the adjusted view for USD and gold in the members' video below.

Instead, it's the US dollar, yen and Swiss franc attracting inflows. Part of that is the better yield of the dollar since the Fed began hiking rates but it also reflects the diminished faith in gold and low inflation prospects. There is some support for gold at the Feb 2017 low of $1180 and it's somewhat oversold after weeks of selling but overall, Monday's drop darkens the picture in the medium term. As long as money continues to flow from EM with significant USD-denominated debt, the USD-play at the expense of gild shall resume, while there is no bump up in inflation expectations.

Emerging markets have stabilized in as the Turkish pushed back up to 6.40 per $1 USD from as low as 6.98 $1 USD. It remains unclear who is holding the potential losses and if Turkey can dig in for a rebound. EM trouble has briefly shifted the focus away from the trade war. That theme is sure to flare up again shortly as NAFTA negotiations chug along.

Macro data resumes on Wednesday with UK CPI and US retail sales, US indus production (Thurs) and UK retail sales (Fri).

Act Exp Prev GMT
Core Retail Sales (m/m)
0.4% 0.4% Aug 15 12:30

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