There were a number of reports this week:
- Fed Balance Sheet (WALCL): -21B [-0.25%] w/w. Deflationary.
- Gross Domestic Product (GDP): +1.5% q/q, +6.74% y/y. Not adjusted for inflation.
- Personal Income (PI): +0.4% m/m. Inflationary.
- Durable Goods, New Orders (DGORDER): +1.72% m/m. New high. Expansionaary.
- Auto/Light Truck Sales (ALTSALES): -6.85% m/m. Recovery slowing. Heavy Truck Sales +4.89% m/m – almost a new all time high. Mixed.
- Total Bank Credit (TOTBKCR): +0.05% w/w. Deflationary.
It was a mixed picture; the GDP number was unexpectedly high, personal income was strong as were durable goods orders, while bank credit moved mostly sideways. Auto sales declined. These numbers mostly aren’t recessionary. That said – bank credit mostly sideways remains a warning signal. Credit must constantly expand or the whole system will collapse.
This week, rates generally moved higher, nudged up by Powell, who when speaking at a banking conference, reminded everyone that “most FOMC members expect to raise interest rates at least two more times before year end.” Prod prod. The CME Fedwatch Tool dutifully raised its July 26th chance of a rate increase to 87%.
Since Friday marked end of month, this week’s report will have a lot of monthly charts in it – because zooming out on the timescale provides longer term context.
This month, gold fell 43.70 [-2.21%] to 1929.40. The monthly swing high candle print looked pretty ugly, and it was enough to drop the monthly model into a downtrend. That said – down at the daily level, this past Friday looked as though it might be a bullish reversal. Will it be enough to stop gold from entering a longer correction? Likely too soon to tell. Gold’s move this month wasn’t about currencies; gold/Euros did even worse [-4.53%], and it too is in a downtrend. My magic 8-ball says: “Reply hazy. Try again.”
Longer term, gold is still knocking at the door of a breakout to new all time highs. As confidence in institutions moves lower, I’d expect gold will break out. I just can’t say when, or what the triggering event might be. Perhaps the BRICS currency meeting in August?
by mikies123 
