July 9 (IBT Times) — The gold price held steady near $1,585 per ounce on Monday as the yellow metal consolidated following last week’s 0.9% decline. The price of gold stabilized alongside the U.S. Dollar Index this morning, which inched lower by 0.1% to 83.292. In recent weeks, gold prices have fallen back toward the midpoint of the $1,540-$1,620 trading range that they have occupied since early May.

Last Friday the gold price fell over $20 despite the worse than expected U.S. employment report. While the non-farm payrolls data came in below economists’ estimates, the general consensus among investors was that the jobs report was not disappointing enough to meaningfully increase the odds of a third round of quantitative easing (QE3) by the Federal Reserve.

While the United States’ central bank may not be implementing further easing measures in the near future, several others around the world announced additional monetary stimulus programs last week. This past Thursday, the Peoples’ Bank of China (PBOC) unexpectedly cut interest rates, the Bank of England expanded its quantitative easing program by 50 billion pounds, and the European Central Bank (ECB) reduced its benchmark interest rate to a new record-low of 0.75%.

Looking to the week ahead, the U.S. economic calendar is relatively light, but does include a few key items. The Fed minutes – a recap of the latest Federal Open Market Committee (FOMC) meeting – will be released on Wednesday afternoon, followed by weekly jobless claims on Thursday. The week then concludes on Friday with reports on the Producer Price Index (PPI) and University of Michigan Consumer Sentiment Index.

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July 9 (Reuters) — Spanish and Italian bond yields rose on Monday and financial market investors saw little chance of respite in the euro zone’s debt crisis from a meeting of finance ministers due to start later in the day.

Spanish 10-year yields rose 9 basis points to top the critical 7 percent level seen as unsustainable in the longer-term, re flecting doubts over how measures agreed last month to stem the crisis will be implemented.

“This is a product of the fact that implementation risk has come to haunt the EU summit’s plans more rapidly than might have been expected.”

Euro zone officials agreed last month that the euro zone’s bailout funds could be used to buy bonds in the secondary market – which could help Spain and Italy – and could also be used to directly recapitalise Spain’s ailing banks.

But the lack of detail on how the plans will be implemented, as well as opposition from Finland, have dampened initial market euphoria over the deal. Questions over the rescue funds’ capacity to undertake such steps, and no signal the European Central Bank would take any further unconventional measures to support indebted countries, have also not helped sentiment.

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We’ve just posted a new interview of Steve Forbes by Hera Research’s Ron Hera at USAGOLD’s Gilded Opinion page. In it he talks about sound money and the gold standard being the surest road to curbing the federal government’s animal spirits and bringing back America. Enjoy.

Link

July 6 (Reuters) — Gold initially rallied in response to the report, touching a session high of $1,609.39 an ounce on the view that the poor number would pile pressure on the Federal Reserve to ease monetary policy further.

The metal then turned sharply negative, touching a day low of $1,583.99 an ounce as the dollar rose to fresh five-week highs against the euro, reducing gold’s appeal as an alternative asset to the U.S. currency.

“The precious metals bounced strongly when the (payroll) numbers turned out to be below expectations. But after all the data is a bit mixed: it is not bad enough to suggest the Fed will go ahead with a new round of quantitative easing but at the same time it is not good enough to exclude it,” said T-commodity consultant Gianclaudio Torlizzi.

Quantitative easing by central banks devalues paper currencies and should in theory boost investor appetite for hard assets such as gold, traditionally seen as a hedge against inflation.

“While the ECB cut was near-term bearish for gold as it weakened the euro, it may be more bullish longer term. Added global liquidity with policy easing measures from the euro zone, China, and the Bank of England may stimulate demand for hard assets, including gold,” said HSBC in a note.

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July 6 (MarketWatch) — The U.S. created just 80,000 jobs in June — about one-third of them temporary — as evidence hardened that the economy has hit another rough patch.

The unemployment rate was unchanged at 8.2%, the Labor Department said Friday.

The decline in job growth has raised the odds of further Federal Reserve intervention in the economy. The central bank will hold its next major meeting in late June and the Fed could launch a new program to buy bonds to try to drive down interest rates.

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Here’s a very good interview of the Wall Street Journal’s Simon Constable on the significance of central bank gold purchases, i.e., what it means to the ordinary gold owner.

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July 5 (Reuters) — Gold prices rose towards two-week highs on Thursday, with investors reluctant to make big bets after pricing in an expected European Central Bank (ECB) rate cut, with investors moving on to focus fully on key U.S. jobs data on Friday.

Spot gold was up 0.2 percent at $1,618 an ounce by 1004 GMT, treading water along with equities and the euro, also little changed ahead of the ECB meeting, where policy makers are likely to cut rates to a record low to contain the debt crisis.

Bullion is up more than 1 percent on the week, potentially heading towards its first back-to-back weekly gains since late February.

“I think the ECB is priced in — it’s been a case of buy the rumour all week and now probably some profit taking on the announcement,” Societe Generale analyst Robin Bhar said.

“The market would really need something big like a Fed move – not the ECB or Bank of England which is a bit more of a minor consideration.”

Friday’s June U.S. employment data is likely to reflect the impact of the euro zone crisis and weak economic data and this could encourage the Federal Reserve to take more measures to stimulate economic growth.

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July 5 (MarketWatch) — China’s central bank on Thursday unveiled a surprise interest rate cut, lowering borrowing and deposit rates while also enabling banks greater leeway in setting their own lending rates at a discount to the benchmark.

The People’s Bank of China lowered its one-year yuan deposit rate 25 basis points, or a quarter percentage point, to 3% and its one-year lending rate by 31 basis points to 6%, according to a statement posted on its website.

The central bank also announced more relaxed rules on lending for commercial bans, allowing lending rates to be set as low as 70% of the benchmark rate, down from 80% currently.

The move, the second rate cut in a month, was seen as part of efforts to prop up lending after data showed credit growth in an apparent stall in June. It also comes on a day when the European Central Bank cut interest rates by a quarter-point and the Bank of England extended an asset purchase program by 50 billion pounds.

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JK Comment: Here we go again…that’s two out of three of the world’s largest economies that are easing/providing stimulus.

July 5 (MarketWatch) — Europe’s major central banks delivered a further round of monetary stimulus in the face of a deepening slowdown Thursday, with the European Central Bank cutting its key lending rate to a record low and the Bank of England embarking on additional quantitative easing.

Earlier, the Bank of England’s Monetary Policy Committee voted in London to boost its asset purchases by 50 billion pounds ($78.1 billion), bringing the total size of the program to £375 billion. The bank said it expected the purchases to take four months to complete.

The ECB, however, surprised investors somewhat with its decision to cut the deposit rate to zero. Several economists had forecast the ECB would hold the rate steady or to at least hold it above zero, fearing a more aggressive cut could hurt bank profits and weigh on already-weak private-sector lending.

The Bank of England, in a brief statement accompanying its rate announcement, focused on a deteriorating economic picture.

“U.K. output has barely grown for a year and a half and is estimated to have fallen in both of the past two quarters. The pace of expansion in most of the United Kingdom’s main export markets also appears to have slowed. Business indicators point to a continuation of that weakness in the near term, both at home and abroad,” the bank said in a statement accompanying the decision.

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July 5 (MarketWatch) — In another signal of a deteriorating U.S. economy, the services sector grew at its slowest pace since January 2010, according to an index released Thursday.

The Institute for Supply Management said its services index dropped to a reading of 52.1% in June from 53.7% in May.

While not the disappointment that the ISM manufacturing gauge was earlier this week, the services index came in below the 52.9% expected in a MarketWatch-compiled economist poll. The manufacturing sector is typically seen as reacting more quickly to changes in the U.S. economy than the services side. Read more on ISM manufacturing.

Readings above 50% indicate expansion, and major components in the index were still holding above that level.

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July 5 – Marketwatch -

European Central Bank President Mario Draghi on Thursday said further downside risks to euro-area growth have materialized and indications for the second quarter point to weakened growth and heightened uncertainty. Inflationary pressure has been dampened by the risks to growth, he said. The ECB on Thursday cut its benchmark lending rate by a quarter of a percentage point to a record-low 0.75% as expected. It also lowered the deposit and marginal lending-facility rates. “Beyond the short term, we expect the euro-area economy to recover gradually but see momentum dampened by number of factors,” said Draghi at a press conference. Such factors include tensions in euro-area sovereign-debt markets and high unemployment, which will weigh on underlying growth momentum, he said. “Risks surrounding the euro area continue to be on the downside.

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03-Jul (USAGOLD) — Gold surged definitively back above the $1600 level in overseas trading, underpinned my rising expectations of further central bank easing. The ECB is widely expected to cut its refi rate by 25 bps later in the week. Additionally, the BoE is likely to boost its asset purchase target by about £50 bln. While the FOMC doesn’t meet again until the end of the month, yesterday’s terrible ISM print (though offset somewhat by today’s reported rise in May factory orders) has once again raised the likelihood of some additional Fed measures as well.

This would all be in addition to the measures agreed to at last week’s EU Summit, which essentially amounts to a form of QE (using the bailout funds to buy sovereign periphery debt) and a European version of TARP (pumping bailout funds directly into the Spanish banking system). You may recall that QE1 and TARP in the US back in 2008 effectively ended the financial crisis inspired deleveraging sell-off in gold, catapulting the yellow metal from 681.65, back above $1000 for good, and ultimately on to the current all-time high of 1920.50.

With the yellow metal convincingly above the 20- and 50-day moving averages once again, a more constructive technical tone seems to be developing. The next significant resistance level to be watching is the early-June high at 1640.72, which is bolstered by the 100-day moving average at 1639.76. With gold still in the lower half of the broad 1920.50/1522.40 range, even with the recent gains, these prices may still prove to be the bargain of the summer.

• US factory orders +0.7% in May, above market expectations of unch, vs negative revised -0.7% in Apr; inventories -0.2%.
• UK M4 Money Supply – Final (sa) -0.1% m/m in May and -4.1% y/y.
• UK CIPS Construction PMI tumbled to 48.2 in Jun, vs 54.5 in May.
• Eurozone PPI slows more than expected; -0.5% m/m in May to 2.3% y/y, vs 2.6% y/y in Apr.
• Hong Kong retail sales value 8.8% y/y in May, vs 11.4% y/y in Apr.
• RBA holds Official Cash Rate steady at 3.5%, in-line with expectations.

02-Jul (USAGOLD) — Gold retreated in overseas trading on Monday as the euro fell and the dollar rebounded amid dissipating optimism about the ‘grand bargain’ reached at last week’s EU Summit. After all, what transpired last week was just another kick of the can down the road. And while one might argue that steps toward a tighter banking union are steps toward a more integrated Europe, the measures agreed to do little to address the underlying imbalances that precipitated the crisis.

By early New York trading however, the yellow metal was on the mend and had traded briefly back above the $1600 level. With the euro still under pressure and the greenback underpinned, it would seem that the safe-haven appeal of gold is reasserting itself. The 20 and 50-day moving averages have converged just below $1600, marking this area as important resistance.

With a new record high in the eurozone unemployment rate of 11.1% and inflation moderating, the ECB is widely expected to cut its refi rate by 25 bps on Thursday. There is also a camp that thinks the ECB will only adjust the deposit rate at this meeting, discourage banks from hoarding cash and keeping some powder dry in case the ‘europhoria’ from the summit completely evaporates.

• US manufacturing ISM fell to 49.7 in Jun, well below expectations of 52.0, vs 53.5 in May; prices 37.0, vs 47.5 in May.
• US construction spending +0.9% in May, above market expectations of +0.2%, vs positive revised +0.6% in Apr.
• Eurozone unemployment rate edged to a new record high of 11.1% in May, in-line with expectations, vs 11.0% in Apr.
• Turkey Q1 GDP 3.2% y/y, vs 5.2% y/y in Q4-11.
• Switzerland retail sales improves to +6.2% y/y in May, vs upward revised +0.2% in Apr.
• Switzerland SVME Manufacturing PMI rose to 48.1 in Jun, vs 45.4 in May.
• Eurozone Markit PMI – Manufacturing was revised higher to 45.1 in Jun, beating expectations of 44.8, vs 44.8 previously.
• UK CIPS Manufacturing PMI rose to 48.6 in Jun, beating expectations of 46.1, vs 45.9 in May.
• South Korea CPI slipped to 2.2% y/y in Jun, vs 2.5% in May.
• Japan Tankan Index (Large Manufacturers) -1 in Jun, vs -4 in May; Large Non-Manufacturers index rose to 8, vs 5 in May.
• China HSBC/Markit PMI – Manufacturing slipped to 48.2 in Jun, vs 48.4 in May.

02-Jul (Reuters) — Gold prices eased on Monday after the previous session’s sharp rally, surrendering gains along with the euro and other commodities as a bounce lent to the financial markets by European Union plans to tackle the debt crisis petered out.

Gold surged 3 percent on Friday, its biggest one-day rise since June 1, after euro zone leaders agreed at a summit on measures to cut borrowing costs in Italy and Spain and shore up the region’s banks, leading to a broad financial market rally.

It has since surrendered some gains, but lingering optimism over the summit’s outcome, reflected in gains in stock markets and falling Spanish and Italian bond yields, provided support.

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June 29 – CNBC – VIDEO

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JK Comment: Rogers makes a pretty simple recommendation here: “Buy hard assets”. A must watch take on today’s news out of Europe and subsequent move in, well, everything.

by Mohamed El-Erian
Once again, after a painful learning process and motivated by the best of intentions, European leaders gather in crisis management mode. Important decisions are taken but, again, they appear to fall short of the dramatic breakthrough required to get ahead of a crisis that eats away at the integrity of the region’s historic integration project.

…Without additional measures, it seems inevitable it will only be a matter of time until European leaders gather again for a crisis management meeting; and they will find the challenges even more onerous.

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PG View: The massive ECB LTROs bought a couple weeks of relief for beleaguered European markets, the initial announcement of the €100 bln Spanish bank bailout garnered support for a single trading day, so focusing the might of the EFSF/ESM bailout facility on the problem should be good for what? A month? Less?