Gold traded modestly higher last night in a range of $1266.80 - $1271.15. It faded some weakness in the red-hot dollar, with the DX slipping from 94.88 to 94.43.

The greenback was pressured by some initial strength in the yen (110.08 – 109.86, firmer CPI, PMI, All Industry Activity Index), a firmer euro ($1.16 -$1.1675, stronger German and Eurozone PMI’s), and continued strength in the pound ($1.3240 - $1.3314, yesterday’s tilt to the hawkish side by the BoE still resonating), along with some profit-taking after a strong week.

Mostly firmer global equities were a headwind for gold, with the NIKKEI off 0.8%, the SCI up 0.5%, European markets were up 0.4% to 0.8%, and S&P futures were +0.5% - with news that the 35 biggest US banks passed the first round of the Fed’s stress tests supportive of equities.

Firmer oil (WTI $65.70 - $66.60, rumors that OPEC was leaning to only a moderate output increase) was also a tailwind for stocks.

After the NY open, S&P futures rose (+16 to 2768) on news from OPEC that the output increase – while announced at 1M bpd, would be effectively only a rise of 600k bpd as many of the members were already at capacity, and took WTI over $68.

The US 10-year yield moved up to 2.928%, and the DX rebounded to 94.81. Gold retreated in response, but found support at the overnight low at $1266.80.

AT 10 AM, a worse than expected reading on US Markit Manufacturing PMI (54.6 vs. exp. 56.1) took US stocks lower (S&P +5 to 2755). A tweet from Trump threatening new tariffs on the EU also weighed on stocks:

Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies...

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