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Morning Snapshotby Peter A. Grant
Oct 25, AM 
Gold is rebounding after ticking ever so briefly below $1700 yesterday. The Fed held steady on policy and refrained from heaping on any additional accommodations, at least for the time being. While this was perhaps a short-term disappointment to some, many continue to believe the Fed will relaunch outright Treasury purchases before year-end.There was seen decent US economic data this morning, with durable goods orders rebounding 9.9% in Sep. However, while the headline number was encouraging, the internals were weak, suggesting Q3 GDP may be even softer than expected. JP Morgan was quick to cut their US Q3 GDP forecast from 1.8% to 1.6%, and I suspect others will follow-suit. US initial claims fell 23k to 369k, which was below expectations. While the weekly data have been rather volatile of late, the average is actually flat from late September. Expectations for October nonfarm payrolls are running around +120k (still a pretty weak number), with an uptick in the jobless rate to 7.9%. The Fed's FOMC statement noted that "Inflation recently picked up somewhat, reflecting higher energy prices." While their general view is that inflation risks are benign over the medium and longer-term, I suggested in yesterday's DMR that price risks were "percolating just below the surface of this subdued economy." Axel Merk of Merk Investments suggested yesterday that heightened inflation expectations had nothing to do with energy prices, but were in fact a direct result of the QE3 announcement in September. Meanwhile, David Einhorn of Greenlight Capital lambasted Fed Chairman Bernanke in his third quarter letter to investors, saying of QE3; "what once looked like a purchasing spree of unimaginable proportions is now just the monthly budget." Einhorn's conclusion: "[A] large allocation to gold still seems like a very good idea." • US NAR pending home sales index +0.3% to 99.5 in Sep, near expectations, vs 99.2 in Aug. • US initial jobless claims -23k for the week ended 20-Oct to 369k, below expectations of 374k, vs upward revised 392k in previous week. • US durable goods orders +9.9% in Sep, above expectations of +7.0%, vs positive revised -13.1% in Aug. • Riksbank holds repo rate steady at 1.25%, in line with expectations. • Eurozone M3 (sa) SEP +2.7% y/y in Sep, below expectations of +3.1%, vs +2.9% y/y in Aug. • UK Q3 GDP - 1st Release +1.0% q/q, above expectations of +0.6%, vs -0.4% in Q2; 0.0% y/y, on expectations of -0.5%. • Italy retail sales (sa) AUG 0.0% m/m in Aug, vs -0.2% in Jul; -1.0% y/y. • RBNZ holds official cash rate steady at 2.50%, in line with expectations. • China leading indicators +0.3% in Sep, vs +1.7% in Aug. • Singapore manufacturing production -2.5% y/y in Sep, vs negative revised -2.3% in Aug. Peter Grant is USAGOLD's resident economist and a well-known analyst globally in the forex and precious metals markets. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
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