Happy Friday, traders. I suspect, with the move’s gold has made this morning, that you’d all like to get to the point with some speed today.
So, what kind of week has it been?
Well, pretty calm and flat until just now. As we anticipated heading into the week, US economic news and data flow was mostly quiet as a result of the government shutdown. Following last Friday’s breakdown in support levels, for most of the week gold spot has pivoted around the $1280/oz level. As the week carried on, the yellow metal slowly regained its footing—largely because investor’s read the lower priced as cheap and began bidding back up—and by Thursday morning spot had recovered to $1285 and even sharp dip resulting from a strong rush of selling pressure could be shrugged off before lunchtime.
With the table set, gold made a hard charge all the way back to challenge cyclical resistance at $1300, by all accounts driven by, among other things, a report that the FOMC is discussing slowing the runoff of its bond portfolio that was so inflated by the quantitative easing process.
At the time of writing, gold spot has retreated a bit after a first failed attempt to break $1300/oz and is marked at $1298. In a positive sign for gold heading into next week, when it’s negative corollaries like USD and treasury yields recovered from this morning’s trading gold spot managed to hold on to all but a dollar of its gains.
What little macroeconomic data we did see this week fell somewhere between negative and unimpressive. Stateside, existing home sales metrics continued to slump to a three-year low while the Richmond Fed’s report on manufacturing activity delivered soft numbers amid increased scrutiny. Initial jobless claims was the bright spot this week, continuing to roll-off from the rise in the last months of 2018, to a low-point dating as far back as 1969.
The economic picture overseas wasn’t much better this week, with a middling report on consumer sentiment in Germany on Tuesday, as well as Thursday’s “very disappointing” PMI data for the Euro Area. On the central bank front, both the Bank of Japan and the European Central Bank acknowledged growing risks to the global economy but made no material changes to their currently monetary policy strategies.
Davos crowd spending much of the day acknowledging what most of you know already: global growth is decelerating. Here's hoping the conversation shifts rapidly to identifying the correct policy response... Europe isn't getting nearly enough attention on this front.
— Jonathan Ferro (@FerroTV) January 22, 2019
In terms of our current macroeconomic stories, the UK’s Brexit is heading towards another House of Commons vote on January 29 with things looking almost exactly as they did a week ago.
Here at home, things are beginning to move—if opaquely—with the President just not announcing an agreement is in place to re-open the federal government for three weeks.
Deal Trump is announcing:
• Funds government until Feb. 15
• Backpay for federal workers
• No money for wall
• Sends House and Senate negotiators to a conference committee to debate border security package pic.twitter.com/sGsCCCghqH
— Yahoo News (@YahooNews) January 25, 2019
I’m a little later than usual in publishing my Friday post once an announcement was expected for the White House, because I was concerned a done-deal would mean a re-charged US Dollar that would knock gold back from it’s lofty perch. As it turns out, we’re not seeing much reaction at all from the dollar and gold spot continues to hold well at $1298.
Next week might prove a little extra-packed, as we’ll have to see what furloughed data (like the durable goods report that was scheduled for today) from the last three weeks will be released to the public and when. Our main focus will of course be on the first FOMC meeting and press conference of 2019.
Until then traders, I hope you all enjoy your weekend. We’re back to work on Monday, and maybe the government will be too.