Gold Consolidates Below Resistance as Momentum is Neutral

Gold prices where nearly unchanged on Monday, and continue to consolidate in a tight range below the 10-day moving average which is seen as short term resistance at 1,297. Support is seen near and upward sloping trend line at 1,286. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero index level with a flat trajectory which reflects consolidation.

Eurozone PPI inflation fell back

Eurozone PPI inflation fell back to 2.0% year over year in April, from 2.4% year over year in the previous month. A weaker than expected number, but in a way already superseded by the jump in HICP inflation a month later and thus unlikely to change the core assumption that inflation is slowing moving higher.

Eurozone Sentix Investor index slumped in June

Eurozone Sentix Investor index slumped in June. The overall reading dropped to just 9.3 from 19.2 in May. The current conditions indicator fell back 34.5 from 42.8, the future expectations index plunged to -13.3 from -2.0 in the previous month. This is the third consecutive month with a negative reading, which means the number of those pessimistic about the outlook over the next six months, has been rising sharply and has in fact been outnumbering the optimists since April. Indeed compared to the +16.8 for the future expectations reading at the end of last year, the numbers look pretty dismal now, highlighting also that the window of opportunity for the ECB to phase out QE is getting smaller.

SF Fed’s Williams said the gradual rate path should be maintained over the next two years

SF Fed’s Williams said the gradual rate path should be maintained over the next two years. And he added the FOMC is about 3 moves away from a “neutral” level. He, like others, including Chairman Powell, believes forward guidance has about run its course and less will be needed as “neutral” is approached. The Fed need not pause, either, once the 2% target is attained or exceeded, especially if the economy is still going strong. Williams will be taking over the important post of leading the NY Fed later this month.