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Gold Climbs as Dollar Eases as Geopolitics Remains in the Headlines

By:
David Becker
Published: Jun 5, 2018, 17:04 UTC

Gold prices edged higher as the dollar eased as trade talks continue to drive geopolitical events.  The EU PMI was in line with expectations while EU

Comex Gold

Gold prices edged higher as the dollar eased as trade talks continue to drive geopolitical events.  The EU PMI was in line with expectations while EU retail sales rose. Prices bounced ahead of support near an upward sloping trend line that comes in near 1,288. Resistance on the yellow metal is seen near the 50-day moving average at 1,317. Momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The fast stochastic generated a crossover buy signal in neutral territory which reflects some positive momentum.

U.S. NEA Director Kudlow said a shift in NAFTA talks to separate bilateral negotiations with Canada and Mexico is seriously being contemplated by Trump. Separate talks may help them move more quickly, he said, and he’s expecting to hear a response from Canada. The headlines are being taken initially as a sign that trilateral negotiations have hit an impasse, though of course a subsequent breakthrough would be positive. Eurozone composite PMI confirmed.

Eurozone composite PMI confirmed

Eurozone composite PMI confirmed at 54.1, unchanged from the preliminary number and down from 55.1 in the previous month. The final services reading was revised marginally lower to 53.8 from 53.9 reported initially and down from 54.7 in April. So a broad decline in confidence levels in April, with the composite output index at the lowest level since November 2016. Still, these are still high levels and the composite index has now signaled expansion for 59 straight months. Job creation continued to expand for the 43rd successive month and while it is at a 17 month low that is also reflecting emerging shortages of skilled labor in countries such as Germany, where the labor market is already tight.

Eurozone retail sales rose

Eurozone retail sales rose just 0.1% month over month in April, less than anticipated, but with March revised up to 0.4% month over month from 0.1% month over month, the annual rate still stood came in at 1.7% year over year, up from 1.5% year over year in the previous month and the three months trend rate came in at 0.0%, up from -0.1% in march and -0.2% in the three months to February. So somewhat of an improving trend, even if the reading remains weak. PMI surveys suggest ongoing job creation and there are signs that wage growth is slowly picking up, so consumption should continue to underpin overall growth.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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