Gold Rises As Iran’s Deadline Looms
U.S. 10-year Treasury bond yields continued to hit new monthly
lows, after a report showed that inflation rose less than expected during the
month of July. Bond prices have risen steadily over the last two months,
on speculation that the Fed could be done with its rate-tightening cycle for
now. After today’s economic report on personal consumption, interest rate
futures show that the likelihood of a hike in September has dropped to about
22%.
The dollar rallied on the euro and the yen today on
speculation that the jobs report will show an increase in new jobs when released
tomorrow. Manufacturing data showed investors that the economy might not
be slowing as quickly as once thought, after consumer spending rose 0.8% last
month, after a rise of 0.4% in June. The ECB did not raise rates at their
meeting today, but basically guaranteed that the Central Bank would raise rates
before the year is out. The hawkish comments from the President of the ECB
initially sparked a rally in the euro, but economic data and forecasts prevailed
the dollar over the yen and euro.
Crude oil futures fell $0.03 to $70 a barrel during trading
today. Investors speculated that Iran’s refusal to comply with the U.N
would have little or no serious effects on the global market, especially if the
U.N does nothing to punish Iran. Iran has been at the center of
international news and a primary driver of the crude market over the summer,
with about 20% of the world’s oil coming from Iran. Natural gas continued
to fall on moderate weather forecasts, and closed down nearly 4% for the day.
Gold traded higher today by over 1% as investors sought a
safe-haven before Iran officially rejects the U.N. proposal. Gold has been
trading hand-in-hand with oil, and this move up could be seen as pre-emptive of
a similar rally in crude. Silver traded lower fractionally, copper was
flat and aluminum rose 0.7%.
The softs traded mixed. Cocoa was higher by 1%, coffee
rose 0.6%, sugar rose 2.4% and orange juice fell 1.3%.
The grains traded higher across the board. Corn rose
1.5%, wheat rose 1.6%, soy rose fractionally and oats rose 3.2%.
The meats traded mixed. Cattle were down fractionally
and porkbellies continued to climb, up about 0.8%.
Factory Orders Fall Less Than Expected In July (full
story).
John Patrick Lee