Gold Pushes Up as US Equities Continue Breaking Records

The week started off on a positive note for gold. It rose $3.00 per ounce (at 4PM Eastern Time) with a tangible assist from a weaker dollar. Silver rose as well, more or less in the same fashion, but with more upward momentum provided by regular trading.

The weaker dollar seems to be in tentative trading territory, however, as there is much in the way of mixed messages stemming from various data releases. Employment is up but spending is down. Housing seems to be booming but large segments of the society can’t get a mortgage. 2016 looks to be the second biggest U.S. car sales year on record. Wages and inflation aren’t budging in real terms.

The interest rate on the 10-year U.S. Treasury bond reflects this sense of bewilderment as to where to go next. The yield is running just a hair above 1.55%, a level at which a range has formed slightly north and slightly south. In 2015, the yield was as high as 2.20%.

The chances for a Federal Reserve rate hike on September 21 are pegged at 12% by the CME FedWatch tool and around 14% at the November 1 vote. The VIX volatility index has been very steady recently, trending lower. It may have bottomed out, however and soon may be expressing rising anxiety about the equities markets around the world.

In the U.S., stocks were stronger, again pushing into new record-high territory. The NASDAQ was strongest, higher by 0.55%. Rising oil helped the Dow but did not factor much in on the S&P 500 or tech-heavy NASDAQ.

In China, it should be noted that Shanghai’s top index recovered to highs not seen since January of this year. Tokyo, however, fell back as Japan missed on GDP forecasts. Japan is waiting for a stronger effect from the BoJ’s recently announced stimulus package.

Much of the movement in equities is because of a no-sentiment sentiment. There’s really no place for money to go except for equities, unless it is to gold on selected trades. (As we are doing.) With over 90% of S&P 500 companies already having reported earnings for the second quarter, that kind of attitude could well hang on into mid-autumn.

We dread the position we are all going to be in, but after all the conflicting data, markets are going to be at the mercy of the minutes of the FOMC July meeting minutes. Those will be released Wednesday.

Get your tea-reading glasses on. Then buckle up.

Wishing you as always, good trading,