Precious metals, especially gold, were looking very steady and moving higher early yesterday morning, but the euphoria was short lived. A much better than expected reading on consumer confidence strengthened the USD and shortly after gold fell $10.00 as a large seller order was executed on the electronic trading platform, which further elected sell stops taking gold back below $1,300.00.
Yesterday’s end of the month trading in most markets turned out to be a day most would like to forget if they were on the 'long side.' The U.S. and German stock markets had the headlines, as a closing loss of 317 points in the Dow Jones average turned that index negative on the year. Precious metals also took it on the chin yesterday, despite news of Argentina’s second bond default in 13 years. For those trading technically, gold and silver did bend a bit with gold trading below support at $1,285.00 but holding $1,280.00, while silver held the bottom of the support range at $20.25. Further pressure on precious metals could come from a falling crude oil market, which is now trading at a four-month low as global inventories continue to rise.
Following this week's better than expected reading on Consumer Confidence and second quarter GDP, we also had a weak reading on housing and this morning brings us a weak Non-Farm Payroll report as 209,000 new jobs were created in July against estimates closer to 230,000 and the unemployment rate rose to 6.20 percent. While the U.S. economic condition continues to be cloudy, there will be no sign from the FOMC and Janet Yellen regarding the timing of rates being nudged higher until the next FOMC meeting, which concludes on September 17. The lack of a FOMC meeting in August, along with thin trading conditions due to many market participants taking vacation in August, sets this month up to be a very volatile one indeed.
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