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Gold Rises On Extended Dollar Weakness While Oil Slides

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Sentiment that an interest rate increase is moving farther and farther out on the time horizon continues to throttle back dollar strength. This, in turn, helped gold rise today.

Provocatively, regular trading showed a loss, small as it was.

Crude oil gained no beneficial bump from the lower dollar, tumbling again on a build in inventories. Those inventories as reported by the U.S. Energy Information Administration were up 1.1 million barrels. West Texas Intermediate was off around 2.50%.

Data also showed that Saudi Arabia was pumping at new record-high levels, piling worry upon worry about the global glut.

Countering the crude build was a larger-than-expected gasoline draw, which is normal for this time of year as huge numbers of motorists in the U.S. take their final fling before school goes back in session, for students and for workers.

In spite of the seasonal drawdown, gasoline (RBOB) fell over 3.50%. Natural gas was down 1.75%.

We’re reminded of the big-spending farmer in town trying to impress the ladies. “There’s more where that came from,” the big spender says bold as brass. That’s how it is with oil, gas and gasoline. Plenty more where that came from.

Naturally, energy prices weighed on stock indexes. But there were a few other factors at work in markets across the globe.

Earnings season is over so any euphoric buying will be absent for a while. Investors and traders are also concerned about machine-gun bursts of data that can upset a fragile equilibrium in the markets. Most seem to be assuming that results in key indicators are going to remain mixed or unpredictable.

Turning back to the relaxations of August, we can pretty much count on quieter markets until after Labor Day. Bigwigs are out of town and most of their junior underlings are on strict orders not to do anything too big or too risky.

Equities in Asia and Europe were mixed to lower for reasons similar to those cited above with an added twist. There is a raft of data due out from China Friday, including industrial production, fixed asset investment and retail sales.

In the U.S., Friday will give us U.S. consumer spending, which is expected to rise but not blow the doors off of anything or anyone. Our own bet is that it stays about the same, appearing weak, as new entrants into the labor market will not make their purchasing power felt until this month or next.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer