Gold Succumbs to Rate Hike, Hillary Yoga Regime
stronger than expected Consumer Confidence pushes gold lower
Hillary's debate reanimation started the gold selloff last night
Summary
Consumer Confidence numbers came out today and may have given the Fed the final domestic nail it needs to hammer down its case on raising rates. Consumer Confidence came in at 104.1, on expectations of Exp. 99. The USD rose almost 0.5% and Gold dropped 1.0% on the info. Another factor was likely Hillary Clinton's post debate bump in the polls due to her debate preparation and performance
Yoga Works
Richmond Fed Data Disagrees
Other data came out contradicting a Fed hike, but the markets seemed to focus on CCI today.
- Richmond Fed’s Sept. Manufacturing Survey at -8 vs Est. -2
- PMI Bounces, but Employment hits 33 month lows
- Fed's Fischer sees wages going up less than projected this year
Gold vs the Dollar
"It's all about the dollar again, and I think the implications are for a stronger dollar and an eventual rate hike by year-end," George Gero, a managing director at RBC Wealth Management in New York, said in a telephone interview. "I'm watching the political effects on the markets."
Gold's Recent Rally is still intact
As we said this morning:
- Only a close under $1325 (Fibonacci Pivot)negates the recent Bull reversal
- Between 1325 and 1350 is the comfort zone
- Above 1350 > 1380>
External Factors Not a Factor
Europe
Looking at the EU alone would tend to make one not be a seller of Gold. Deutsche bank's woes are mounting as the movement to not support "zombie" banks is growing.
“Political support for the banking sector has to end at last,” Bundesbank board member Andreas Dombret says in text of speech in Vienna.The whole sector has to shrink, because the “systematic clean-up, inevitable after the bursting of the financial bubble, isn’t finished yet,” he said.
It would seem for the moment, that the EU isn't throwing any life preservers to the banking industry.
The UK Brexit event will likely be a hard one given the information we have right now. That should also be supportive of Gold. But it is not what the markets are focusing on now. It is the Dollar, as George Gero said.
China
China's economy is slowing down, and that has been the underlying demand for all things metal. If their economy does not pick up, real deflationary pressures will force action in Japan and the US in a few months. But for now, the markets are hating Gold because of a likely Fed hike and a reanimated Hillary.
For Now
As long as Hillary remains on track to win the Presidency, and economic numbers can be interpreted favorably, the Fed has the ability to raise rates. And that is fine for now. The chances of a QE event increase as the US continues to export its deflation.
-vbl
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