GOLD PRICE

The sentiment for current economic conditions in Germany fell to a four-year low,  although January analysts have actually determined that the overall index reading is less negative than initially expected, actually marking a slight improvement over the previous month according to the results of the ZEW survey.

This weekend marks the start of the central bank calendar for 2019, and we have a smattering (highly technical term) of other economic data interspersed as well. Meanwhile, our favorite macro stories will continue to develop: we’ll see what’s next in US government shutdown negotiations after the president’s ill-received offer of a compromise over the weekend; and British Prime Minister Theresa May is due to submit her government’s “Brexit plan B” later this morning, to be voted on in Parliament on January 29.

Markets are reacting to the latest data out of China Monday in a holiday-shortened session. The latest data will only add to investor anxiety over the health of the world’s second-largest economy.

Gold prices followed up last week’s range-bound trading with another four market days with the fence posts only shifted slightly: between Monday and Thursday night gold pinged between strong resistance/support from $1288-1295/oz. Shortly after 4am EST this morning, we saw an object lesson in what any asset becomes more susceptible to that longer it remains in a tight trading range.

Consumer sentiment has dipped to the lowest level since the election of President Trump according to today’s University of Michigan consumer sentiment Index.  The index dropped from 98.3 down to 90.7, well below the forecast 95.7.

The gold market is seeing a little selling in early action today. A stronger than expected Philly Fed index reading may be the culprit. The index hit a reading of 17, stronger than the Empire State index. 

While the ongoing partial government shutdown (now the longest in history) has delayed the release of the most current housing starts data, the private sector has stepped in with its own estimates.

Jobless claims fell last week to a five-week low despite the ongoing government shutdown, although more furloughed federal workers did seek financial aid. Claims dipped by 3,000 to a total of 213,000 instead of the forecast 220,000.

Spot palladium prices are seeing a sharp rise in early action today. Just a few short weeks ago, palladium pushed past gold to become the most precious of the precious metals. The metal now appears to be looking to extend its lead.

Gold and currencies had a rocky day of trading yesterday around the Brexit vote. Theresa May’s Brexit proposal was shot down, a no confidence vote was called was called by Jeremy Corbyn, and a Brexit deal is nowhere in sight.

Gold prices have held steady following the Labor Department’s Producer Price Index report (PPI) which fell 0.2% in December after a 0.1% rise in November. The PPI is used as a key measure of inflation in the US economy, and the most recent report indicates the biggest drop since August 2016.

The Empire State Manufacturing Index dropped 7.6 points to 3.9 in January according to the New York Federal Reserve’s report on Tuesday. The reading is drastically below the projected increase forecast to take the index up to 12.