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David Becker
gold

Gold prices made a higher high on Tuesday but was unable to hold on to gains as the dollar gained traction and yields remain buoyed. The Eurozone composite PMI decline more than expected in July, generating headwinds for the Euro.  U.S. weekly chain store sales dipped, which somewhat offset the declines in the European PMI numbers.

Technicals

Gold prices generated a doji day as the open and close where at the same level.  Prices appear to be forming a bear flag continuation pattern which is a pause that refreshes lower. Resistance is seen near the 10-day moving average at 1,232.  Target support is seen near the July 2017 lows at 1,204. Momentum is neutral as the MACD histogram prints near the zero index level with a flat trajectory which reflects consolidation.

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Eurozone composite PMI fell more than expected

Eurozone composite PMI fell more than expected in July to 54.3 from 54.9 in the previous month, despite a stronger than expected manufacturing reading, which showed confidence in the sector rebounding at the start of Q3. The composite came in at 55.1 from 54.9 in the previous month, while the services reading dropped to 54.4 from 55.2 in June. Survey compiler Markit said data indicates that “the eurozone economy lost momentum again at the start of the third quarter, after a brief rebound in June”, although it admitted that “the rate of growth remained relatively robust in July”. Still, “weakened order inflows and reduced business expectations of future activity”, added to the overall “downbeat picture”. At the same time though Markit reported that price pressures remained elevated.

U.S. weekly chain store sales declined

U.S. weekly chain store sales declined 0.9% were in the week ended July 21, according to The Retail Economist, after dipping 0.5% in the prior week, and 0.7% in the week before that. Also, the 12-month pace slowed to 3.0% year over year versus 4.0% year over year previously. The report noted some of the slippage on the week was a function of Amazon’s Prime Day taking away some consumer discretionary sales from brick-and-mortar shops, as well as from some back-to-school buying. Meanwhile, some back-to-school tax holidays got underway, with Alabama kicking off with tax breaks between July 20 through July 22 and is the first of 17 states to offer such incentives for school supplies.

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