Weak U.S. data boosts gold market
New York (Oct 16) Gold prices are moderately higher in midday U.S. trading Wednesday, supported by the release of an important U.S. economic report that came in weaker-than-expected earlier this morning. December gold futures were last up $9.40 an ounce at 1,492.90. December Comex silver prices were last up $0.031 at $17.415 an ounce.
The September U.S. retail sales report showed a decline of 0.3%--the first contraction in months. Forecasts were calling for a gain of 0.2% from August. This report falls squarely into the camp of the U.S. monetary policy doves who want to see further lowering of U.S. interest rates.
The U.S. dollar index sold off and hit a four-week low today, due in part to the downbeat retail sales report. The weaker greenback was also supportive for the precious metals markets.
Traders at midday were awaiting the afternoon release of the minutes of the Federal Reserve’s beige book, which discusses U.S. economic conditions.
Asian and European stock markets were mixed but mostly weaker overnight. The U.S. stock indexes were slightly lower at midday.
Hopes for a U.S.-China trade deal, called Phase 1, are somewhat dimming at mid-week, along with investor and trader risk appetites, following last week’s meetings between the world’s two largest economies. No deal was signed last week and specifics of the Phase 1 agreement are missing.
In overnight news, the Euro zone consumer price index for September was up 0.2% from August and up 0.8%, year-on-year. Those numbers were about in line with market expectations and continue to show major world economies not battling inflation, but instead battling deflation.
The International Monetary Fund on Tuesday released a report that forecast global economic growth at 3% in 2019, down from a 3.2% growth rate forecast by the IMF in July. The IMF blamed global trade disputes for the slowing economic growth worldwide.
A feature in the markets this week is the strong rally in the British pound, which hit a four-month high Tuesday on ideas of a Brexit deal forthcoming, to avoid a no-deal Brexit. However, no formal agreement has been reached yet between the U.K. and the European Union. The pound was under some pressure Wednesday.
Nymex crude oil prices are higher and trading around $53.65 a barrel today.
Technically, December gold futures prices were near the session high at midday today. The bulls have the overall near-term technical advantage but a five-week-old downtrend is still in place on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,525.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the October low of $1,465.00. First resistance is seen at $1,500.00 and then at this week’s high of $1,503.00.
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