Gold Feels Pressure Following Upbeat U.S. Data
7/17/2019 1:38:03 PM
Daily Gold & Silver Market Report – 7/17/2019
- Positive retail data in the U.S. puts downward pressure on Gold.
- U.S. Treasury and Fed must collaborate to weaken the dollar.
- Palladium volatility leads some analysts to question predictions.
The price of Gold slid early Wednesday morning following surprisingly positive retail sales data in the United States. The U.S. dollar reached one-week highs as investors continue to wait for news on any Federal Reserves changes regarding interest rates. CNBC published a Reuters report showing August Gold futures dipped 0.6 percent to $1,403.10 during early trading. Analyst Peter Fertig believes it is critical for Gold to stay above $1,400 per troy ounce.
After news came Tuesday that U.S. retail sales were up, the U.S. dollar stayed strong, near a one-week high. The announcement further tarnished hopes the Fed would cut interest rates sooner than later. Remarks from the Fed on the effects of global trade tensions and how they have impacted the economy are expected Wednesday afternoon. President Donald Trump stated Tuesday that trade negotiations with China have a long way to go and another $325 billion in tariffs were a real possibility.
Trump Needs Fed Support to Weaken U.S. Dollar
President Donald Trump recently stated his position that Europe and China are manipulating the value of their currency, and the U.S. ought to follow suit. Bloomberg reports if Trump decides to take action and weaken the U.S. dollar, the support of the Federal Reserve will be needed. President Trump has openly criticized the Fed on numerous occasions, going so far as to suggest he might try to replace the Chair Jerome Powell. A weaker dollar typically increases interest in dollar-denominated Gold and Silver from buyers using other currencies.
The Bloomberg article observes the Treasury Department and Federal Reserve have worked together on the last three U.S. dollar interventions. Support from the Fed could double the impact of the $94 billion held by the Treasury that could be used to impact currency markets. Economist Nathan Sheets believes “Fed involvement would bring a technical endorsement, and strengthen the case that the move is justified by fundamentals.”
Palladium Price Volatility Increases
After several months of significant gains, Palladium prices have entered a pattern of volatility. Investing.com reports Chinese auto manufacturing has slowed, partially due to the trade war with the U.S. This, along with an overall slowing global economy have weakened interest in Palladium, a key component in fuel cell engines. While prices for Platinum and Palladium are still expected to rise this year, changing demand forecasts and a weak economy could change things at any time.
At 2:37 p.m. (ET), the APMEX Gold and Silver spot prices were:
- Gold, $1,426.00 Up $13.60
- Silver, $16.05 Up $0.32
- Platinum, $848.00 Up $2.10
- Palladium, $1,545.60 Up $20.30
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