Gold softened last night, retreating in a range of $1506 - $1528. It briefly broke support at $1510 (up trendline from 8/1 $1401 low, double top – 8/7 and 8/8 highs), but once again, decent dip buying took the market back to the $1510 level. The yellow metal was pressured by a bounce in the US 10-year bond yield (1.497% - 1.569%, 2-10 year spread out to +4bp from the inversion two days prior, yesterday’s strong US data helping to lessen recession fears), and mostly firmer global equities. While the NIKKEI was off 0.2%, the SCI rose 0.3%, European shares were up from 0.6% to 1%, and S&P futures were up 1% (strong earnings report last night from Nvidia). Gold was also weighed from an increase in the US dollar (DX to 98.31, 2-week highs), which was lifted by a further decline in the euro ($1.1113 - $1.1073, 2-week low). The common currency was under pressure from a weaker report on the Eurozone Trade Balance, with yesterday’s dovish comments from the ECB’s Olli Rehn still resonating, and with the German 10-year bund yield making yet another all-time low (-0.727%).
At 8:30 AM, a miss on US Housing Starts (1.190M vs. exp. 1.270M) was largely offset by a stronger than anticipated report on Building Permits 1.336M vs. exp. 1.270M). At 10 AM, a much weaker than expected reading the University of Michigan Consumer Sentiment (92.1 vs. exp. 97) tugged US stocks lower (S&P +19 to 2867), with a decline in oil (WTI to $54.24, OPEC’s monthly report cut its forecast for oil demand growth in 2019, indicates mkt in surplus in 2020) contributing to the move. The US 10-year yield was brought down to 1.542%, the DX fell to 98.17, and gold climbed to $1516.
Later...