28-Aug (USAGOLD) — Gold is rebounding from overseas corrective downticks as expectations over further central bank measures continue to vacillate. While markets may be setting themselves up for disappointment, the underlying fundamentals in the gold market at least remain strong; as are the technicals at this point.

Mario Draghi is still trying to cobble together a viable ECB bond buying scheme, and has therefore opted out of this week’s Fed symposium in Jackson Hole. Maybe he’s just avoiding the spotlight since he has nothing of substance to report with Germany still pretty vehemently opposed to what has been proposed thus far and the German Constitutional Court yet to weigh in. However, Draghi’s absence at Jackson Hole may inytensify the pressure on Bernanke to provide some sort of confirmation of the more dovish tone that emerged last week with the release of the FOMC minutes and his letter to Rep. Issa.

Further hints of improvement in the US housing market, as reflected in the June Case-Shiller home price index. While the Case-Shiller report suggests “The market may have finally turned around,” the 20-city index is only up 0.5% year on year. Nonetheless, hints of a possible bottom in housing may give the Fed pause in launching any new massive quantitative effort, although much weaker than expected consumer confidence is a pretty significant offsetting factor.

• US consumer confidence fell to 60.6 in Aug, well below market expectations of 66.0, vs negative revised 65.4 in Jul.
• US S&P/Case-Shiller home price index for 20-cities +2.3% in Jun to 142.21 (nsa), well above expectations of +0.5%; +0.5% y/y.
• Germany GfK consumer confidence steady at 5.9 in Sep, in-line with expectations.
• Spain Q2 GDP (sa) – Final confirmed at -0.4% q/q, in-line with expectations; -1.3% y/y, vs -1.0% previously.
• Hungary unemployment rate moderated to 10.5% in Jul, vs 10.9% in Jun.
• Thailand manufacturing production -5.8% y/y in Jul, vs -9.6% y/y in Jun.
• Hong Kong trade blance -HKD40.1 bln in Jul, vs -HKD44.7 bln in Jun.

27-Aug (USAGOLD) — Gold remains generally well bid early in the new week, underpinned by the persistent notion that further central bank accommodations are in the offing. A new 20-week high was established overseas at 1676.94.

While a Bloomberg article today suggests Fed chairman Bernanke is likely to play it coy at Jackson Hole this week, evidence provided by last week’s release of the most recent FOMC minutes and a letter from Bernanke to US Representative Darrell Issa were reflective of a more dovish bent at the Fed. Chicago Fed Evans, speaking in Hong Kong, reiterated his concerns about headwinds faced by the US economy; a stubbornly high unemployment rate, risks for negative shocks and eurozone contagion, as well as the impending fiscal cliff. Evans called for more bond and MBS buying, along with extending the zero interest rate guidance until unemployment falls below 7%, or inflation rises above 3%. That 3% inflation figure is a full percentage point above the current target of 2%.

In Europe, Bundesbank chief Jens Weidmann expressed his continued consternation over the likelihood of ECB bond purchases. ECB board member Joerg Asmussen attempted to assuage those concerns by saying that the ECB would “only act within our mandate.” He also stressed that central bank bond buying would not amount to financing of governments; although of course issuing debt is exactly how government finance themselves when net expenditures exceed net revenues. You had me, then you lost me Joerg…

Asmussen also said that EFSF/ESM bailout fund should intervene in the primary bond markets of countries that request aid before the ECB acts, conditioned upon serious economic reforms (austerity). However, I don’t think the bailout facilities are prepared to do anything until the German Constitutional Court rules on the matter. That is supposed to happen on 12-Sep.

24-Aug (USAGOLD) — Gold remains well bid heading into the weekend after posting four consecutive daily gains. The yellow metal is up more than 3% from last Friday’s close, and with key technical barriers negated, there is mounting evidence that the long-term secular bull market in gold is re-exerting itself.

Rumors surfaced today that the German Finance Ministry was “seriously considering” a plan that would allow for Greece to “temporarily” exit the the eurozone, rejoining once it had put its fiscal house in order. There was some acknowledgement by sources that this process could take years. An official quoted in the MNI article said that everyone knows that a third bailout of Greece is unavoidable, and that is understabdably perceived to be simply unsalable to German voters: It is the proverbial political third rail. Yet even with some expectation of an eventual return to the EU, a Greek exit — even if temporary — would likely result in absolute chaos.

Once again, this strikes me as not a particularly viable option. The chaos, the capital flight, and quite frankly the likely human flight would be absolutely devastating to Greece. The story of possible ECB rate targeting got recirculated today as well.

Adding to the underpinning of gold were the contents of a letter from Fed chairman Bernanke to Representative Darrell Issa, chairman of the House oversight committee. In the letter dated 22-Aug, Bernanke defends past and ongoing quantitative measures and states, “There is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery.”

The letter further bolstered expectations that the Fed might offer additional accommodations as soon as the September FOMC meeting. This week’s initial boost in those expectations came from Wednesday’s release of the minutes from the last FOMC meeting, which showed that a decidedly more dovish tone had emerged.

A weekly close above the 200-day moving average and the 50-week moving average would bolster the technical picture as well. The March high at 1696.60 is the next significant resistance level I’m watching.

• US durable orders surged 4.2% in Jul, well above market expectations of +1.5%, vs +1.6% Jun; -0.4% ex-trans, vs neg revised -2.2% in Jun.
• UK Q2 GDP – 2nd Release revised up to -0.5% q/q, vs -0.7% initial print; -0.5% y/y, vs -0.8% previously.
• Japan corporate service price -0.2% in Jul, vs negative revised -0.4% in Jun.
• Singapore manufacturing production +1.9% y/y in Jul, vs positive revised +8.0% y/y in Jun.

23-Aug (USAGOLD) — Gold continues to push higher after leaving the 200-day moving average in the dust yesterday. Today the important 1656.06/1660.43 resistance zone was negated, along with the late-April high at 1671.47. What started out as a technical breakout now has additional underpinning provided by rising expectations of further easing on the part of global central banks, which could drive the market higher in advance of the Fed’s Jackson Hole Economics Symposium next week and policy announcements by the ECB and Fed in September.

A decidedly more accommodative tone evident in the FOMC minutes from the 31-Jul/01-Aug meeting, with “many” members in favor of additional measures sooner rather than later in the absence of “substantial and sustainable strengthening” in the economy. The market is now broadly anticipating that the Fed announces additional measures in the coming weeks.

Weak manufacturing data out of China intensified speculation that the PBoC would ease further as well. And finally, there are rumors circulating based on an article in Die Welt that the ECB is contemplating “secret” rate targeting. The rate targeting idea is bad enough, but secret rate targeting srikes me as just plain silly, as I explained in an earlier post. However, I do think it is reflective of just how desperate policymakers are to find a way to give the old proverbial can one more kick down the road.

• US new home sales +3.6% to 372k, above expectations of 369k, vs upward revised 359k in Jun.
• US initial jobless claims +4k to 372k for the week ended 18-Aug, above expectations of 365k, vs upward revised 368k in previous week.
• Eurozone Markit Composite PMI – Flash ticked higher in Aug to 46.6, vs 46.5 in Jul; Services lower at 47.5; Manufacturing better at 45.3.
• Eurozone consumer confidence – Flash fell to -24.6 in Aug, vs -21.5 in Jul.
• Germany Q2 GDP (sa) – 2nd release +0.3% q/q, vs +0.3% previously; +1.0 y/y (wda); +0.5% y/y (nsa).
• Germany Q2 exports +2.5% q/q, vs negative revised +1.2% in Q1; imports +2.1% q/q, vs negative revised -0.2% in Q1.
• Germany Markit Manufacturing PMI – Flash rose to 45.1 in Aug, vs 43.0 in Jul; Services 48.3, vs 50.3 in Jul.
• France Markit Manufacturing PMI – Flash improves to 46.2 in Aug, vs 43.4 in Jul; Service 50.2, vs 50.0 in Jul.
• China Leading Indicators +0.7% in Jul, vs negative revised UNCH in Jun.
• China HSBC/Markit Manufacturing PMI – Flash fell to 47.8 in Aug, vs 49.3 in Jul.
• Singapore CPI +4.0% y/y in Jul, vs +5.3% y/y in Jun.
• Taiwan industrial output 0.0% y/y in Jul, vs -2.4% y/y in Jun.