Good morning. The precious metals are higher in early US trading.
US calendar features CPI (+0.4% expected), Retail Sales (+0.4% expected), Empire State Index, NAHB Housing Mkt Index, EIA Data, TIC Data.
FedSpeak due from Kashkari & Bowman.
While international inflation measures might not actually correlate with inflation in the US, the markets overnight were presented with an avalanche of inflation readings registering a range of results from steady to red-hot.
In fact, beyond the standard scheduled inflation reports, the markets also saw Japanese and Indian April wholesale price index readings jump at the fastest pace in over a year.
However, many central bankers and economists see inflation coming under control throughout the world which in turn makes today's US PPI and tomorrow's US CPI a critical juncture for global inflationary expectations...[MORE]
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Apparently, gold and silver traders have had a change of heart over the weekend as the recent revival of US rate cut hopes have seemingly dissipated overnight perhaps because of the prospect of lingering inflation signals from the US PPI report tomorrow.
However, expectations for the report call for a 0.2% gain, which will match the previous month, and in turn that could mean inflation has continued to grow over the last four weeks albeit at a softer rate.
In another negative, the gold market continues to see signs of high price adversity in the Indian gold trade...[MORE]
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While we understand the premise, seeing gold and silver explode on the upside from a revival of US rate cut hopes appears to be an overreaction.
In fact, outside market impacts from treasuries, currencies, and oil prices this morning are not registering noted action seemingly indicating the metals rallies are occurring in isolation.
Sentiment is so bullish that expectations toward US CPI and PPI next week are factoring in a downtick in inflation which in turn translates into higher rate cut expectations...[MORE]
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While we don't expect to see significant gold and silver price reactions to today's US jobs-related data, a higher high in the dollar early on, slightly higher US interest rates, and a series of lower highs and lower lows in gold this week leaves the bear camp with an edge.
On the other hand, the trade is expecting a slight increase in continuing and initial jobless claims and that could provide a brief lift for prices.
However, favorable Chinese trade data and a report of an improvement in the Chinese homebuyer market should boost expectations for better Chinese gold demand...[MORE]
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With the US dollar posting a four-day high overnight and the bias shifting slightly back toward a hawkish vibe (following Minneapolis Fed Pres. comments suggesting the Fed might be on hold through the end of the year) the bias in gold and silver is down to start today.
Furthermore, the gold market remains under residual pressure from news yesterday that PBOC gold buying last month slowed perhaps because of the unending record price run.
However, the Peoples Bank of China extended its record of 18 straight monthly additions to reserves with a very minimal purchase of 60,000 ounces which is down 100,000 ounces from March and a very explosive 390,000 ounces below February...[MORE]
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