Well, we made it to this Friday, and the last day of July only to be greeted by a plethora of economic statistics and assorted other data that should make for an active trading day. First out of the gate, news that stag-deflation is gripping the Old World in a nasty way, and won't let go. Consumer prices fell by the largest amount in over a dozen years, while the number of jobless European denizens rose to a level not seen in a decade. Proof, once again, that Europe faces the same dangers as does the US for the moment, and that such dangers are not of the 'Zimbabwe-coming-soon' nature by a very long shot.
It is GDP day for the US, and pundits expect to learn of a 1.5% rate of contraction in Q2, as opposed to the 5.5% rate of shrinkage they had to digest for the previous reporting period. The corner that the US economy keeps turning (and turning) around thus far, appears more like that of a hexagonal building, at best. Periods of advances are followed by stagnation plateaus, and so on. In any event, the improvement in the rate of shrinkage can be (and will be) taken as a sign that Team Obama's plans have taken root and are starting to yield some green shoots of their own. However, it is still the 'less worser' (sic) scenario that is playing out.
The yen and the US dollar fell ahead of the release of the US data, and did so -once again- based onthe formulathat positive tea leaf readings in he economy must equate higher risk appetite, a lessened need for safe-haven currencies, and a nod towards speculating in the commodities' complex while the getting is still good in there.
While the results of the GDPtest are far from showing an economy on steroids just yet, return-starved investors -whose sidelined mountain of cash is said to be near $9 trillion (!) appear to be inclined to use small portions of it and throw it at various markets, in the hopes that something sticks to the...wall. Thus, we had a morning high in copper prices that harks back to last October, a nickel price that shot 4.1% upward, and oil prices back to above $67 per barrel.
Precious metals opened the final session of July with modest gains, once again. After the slump seen in the early part of the week, the tentative recovery has brought gold back to just above $935, and platinum close to $1200 again. Stimulating these advances was -once again- the US dollar's slippage on the trade-weighted index. It fell 0.31 points to 78.94 prior to the GDP number being unleashed on the financial media.
Goldstarted off the daywith a $2.00 rise, quoted at $935.70 per ounce, while silver started with a gain of one dime per ounce, registering $13.57 per ounce in New York. The gains shrank to but 80 cents in the minutes following the open, and silver narrowed its own gains to but 4 cents on the day. This, on the US dollar retaking the 79 figure on the index.
Platinum climbed $18 to $1199.00 bid, and palladiumwas seen stalled at$256.00 per ounce. Automotive world news show that Americans are sitting on a huge pile of clunker cars. More than $1 billion worth of old guzzlers have been turned in thus far during the Obama C-4-C program, exhausting the money rather quickly. Like, in six days (!)
The entire program is now in jeopardy, after having resulted in the sale of nearly 23,000 better cars to former clunker-drivers. Just think: between new, shiny, efficient cars, a mandatory national weight-loss program, plus a recommended living will in every safe, America may yet emerge victorious outof the real estate mess it got itself into. If only all the recovery ducks were lined up and ready to take fight in sync. May we have some more, (dollars) please, Sir?
The weekly Bloomberg gold survey points to a possible further easing in gold prices, come next week. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aA1TCOpJYI4Q
Surveyed participants expect the metal to possibly sink towards its summertime lows - possibly touching prices in the $860s in coming sessions, before a fall rebound takes place. We beg to differ on the putative profitability of loading up on gold during the summer, at least as illustrated by the slump in prices that began on July 7 and ended in late October of 2008 - near $680. Hope it is different this time around.
Here we go, GDP down 1%. Less than expected. Against a 5.9% contraction rate in the previous two quarters. BUT- this is, STILL, the 4th quarter of CONTRACTION. A feat never yet recorded in the US economic record-books. Treasurys remained lower following the data release. New tests have been ordered, and the economy promises to come clean and deal with whatever the findings may reveal.
Watch for book-squaring, and the final July tally. As summer doldrums go, gold did not fare badly. But summer ain't over yet even though the livin's been (relatively) 'easy.'
Happy Friday to All,