Gold Ends Slightly Higher As Strong Week Closes; Equities Falter

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The end of an anxious week gave us tumbling oil prices as Saudi Arabia publicly said it did not see a strong possibility there would be a production freeze agreement among OPEC and big on-OPEC producers. The sticking point is between Iran, (which wants to return to its pre-sanction output level ASAP), and Saudi Arabia, (which wants everyone else to freeze production levels while the Saudis bring their production levels down).

That helped West Texas Intermediate crude settle down 4.00%. It has since come back in the afternoon session by about three quarters of a percent. Brent North Sea is also up off its lows, returning to pricing over $46.00 per barrel. No one acknowledges the 800,000-pound in the oil-group’s conference room, however. There is too much oil in the world, so much that OPEC and all its minions cannot control pricing through production manipulation anymore.

Gold saw its best weekly gain in two weeks, despite a stronger U.S. dollar that drove prices of the yellow metal down, only to be rescued by regular trading on the day’s session. Gold is looking to end the day up about $1.50. Silver is off 1.00%. (The dollar later in the day lost ground to the euro. The greenback did maintain its sharp upward edge against the British pound especially, +0.85%. It also was stronger by 0.30% against the yen.)

The dollar movement can be attributed to one of the sausage-makers on the Fed, Eric Rosengren, who, not having had enough say during the two day FOMC meeting, came back to re-iterate his hawkish position and add a couple of twists. His most offensive comment embraced the idea that the U.S. should not let unemployment rates dip “too low.” The three hawkish dissenters in our eyes are ideological dissenters and present no real proof rates need to rise. “It’s about time,” is not an argument.

In the absence of other news today, Rosengren’s commentary moved the dollar, although his comments were not enough to buoy bond yields. The 10-year yield slipped 0.015, eyeing but not breaking through the 1.60% level. Money is still extraordinarily cheap, but even more money needs to get into the hands of small business and newer consumers.

Equities traders in Asia and Europe were gloomy as we head in the weekend. Some there believe those markets will be much more volatile as the U.S. elections drawn closer. (Monday, of course, is the first debate.) One analyst we know conjectures that Europe and Asia are mystified not just by this particular election – which is far out on the spectrum – but that foreigners in general are confounded by the American process.

U.S. equities traders were more concerned about concrete problems like the drop in oil price and what appear to be mediocre iPhone 7 sales. The iPhone report was issued by a subscription-only analytical company. Whether or not accurate, for a while the rumored report knocked about 2% off Apple share prices, which in turn helped to drag the Dow down by 10 points. Apple suppliers also took a hit on share prices.

Additionally, Twitter is fielding a lot of reassessment regarding its true worth (which is admittedly enormously high, though dented). Apparently, Twitter cannot seem to find traction in advertising revenue growth. Facebook has its own problem, having “discovered” a false metrics problem among its ad videos that showed more viewers than there were in reality. FB’s problem is temporal, however. Twitter’s is structural and persistent.

A few suitors are set to buy Twitter but many thinkers are wondering just how overweight the little blue tweeting bird is.

Long and the short of it is that NASDAQ, which seemed to be rising unstoppably, backed off its record-setting ways as we head into the weekend.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer