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1. Gold has traded between $1,402 and $1,149 so far today…as of 7:00 am Pacific, bullion has retreated $17 an ounce to $1,406 in a healthy cleansing of temporarily overbought conditions after fresh 6-year highs early yesterday…Standard Chartered sees Gold prices rising to an average of $1,450 an ounce in the 4th quarter…“Gold has rallied to test levels last seen 6 years ago, and we believe the combination of dovish central banks, continued trade tensions, falling yields, geopolitical tensions and central bank buying poses further upside risk to prices,” the bank said…however, over the immediate/near-term, “speculative investor positioning and technical indicators suggest Gold may face a short and shallow correction”…Gold in Canadian dollars briefly hit a new all-time high yesterday of $1,895, eclipsing the previous record just below $1,890 set in 2011…short-term technical conditions also became quite extreme, so it wasn’t surprising to see an immediate pullback…Silver is off 11 cents at $15.23…Silver remains well within its new uptrend with strong support at and just below $15.00…Nickel has climbed another 7 cents to $5.62…Copper and Zinc are both flat at $2.71 and $1.19, respectively…Crude Oil has surged $1.58 a barrel to $59.41 while the U.S. Dollar Index has rebounded one-fifth of a point to 96.30…data released this morning showed mixed momentum in the U.S. manufacturing sector…new durable goods orders dropped by $3.3 billion or 1.3% in May, more than expected…however, the reading for core durable goods, which strips out the volatile transportation sector, increased by 0.3%, exceeding the consensus estimate…
2. Wall Street pushed higher at the open, thanks to a bullish assessment of U.S.-China trade talks from Treasury Secretary Steven Mnuchin and stronger-than-expected tech earnings…Mnuchin told CNBC in an interview this morning that a U.S.-China trade deal was “90%” complete, a grade he has used to describe progress several times in the past, adding, “I think there’s a path to complete this” when President’s Donald Trump and Xi Jinping meet later this week at the G20 Summit in Japan…“The message we want to hear is that they want to come back to the table and continue because I think there is a good outcome for their economy and the U.S. economy to get balanced trade and to continue to build on this relationship,” Mnuchin said…
3. China figures it can push Canada around at will, and it’s probably right…we have weak, ineffective leadership…on the eve of Prime Minister’s Trudeau’s trip to the G20, China has called a halt to all meat exports from Canada, an escalation of a burgeoning diplomatic dispute between the 2 countries…in a statement sent to the National Post yesterday afternoon, a spokesman for the Chinese embassy said “ractopamine” – a feed additive – had been found in Canadian pork shipments and that veterinary certificates for the animals were fraudulent…the additive has permitted uses in Canada but is banned in China…a Chinese embassy spokesperson said some 188 certificates were forged…
4. An unusual trend, referred to by Citi strategists as “de-equitization”, is serving to prop up U.S. stock prices at a time when many investors are still hesitant to back the multi-year rally in U.S. equities, according to Robert Buckland, chief global equity strategist and managing director at Citi Research…“I think it’s an important support for the stock market at a time when investors have generally been suspicious of equities through most of this bull market,” Buckland stated in an interview on CNBC’s “Trading Nation”…“Really, the main marginal buyer of the public equity asset class has been companies, not your regular investor”…for Citi, de-equitization doesn’t only refer to share buybacks – which reached historic highs last year – but also mergers and acquisitions…stock offerings and IPOs typically serve as a counter to that, but now, even those aren’t enough to stem the contraction, Citi says…
5. Federal Reserve Chairman Jerome Powell stressed the central bank’s independence in a speech yesterday that came amid continuous pressure from the White House to cut interest rates…he spoke during an event at the Council on Foreign Relations in New York that investors were watching closely for clues about the direction of monetary policy…“Since the beginning of the year, we had been taking a patient stance toward assessing the need for any policy change,” he said…“We now state that the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2% objective. What happened is things have changed since May 1, significantly,” he added…“The global risk picture has changed. The crosscurrents have reemerged, with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy. Our contacts in business and agriculture report heightened concerns over trade developments”…Powell emphasized, however, that politics won’t be a consideration when it comes to possible interest rate cuts…“The Fed is insulated from short-term political pressures – what is often referred to as our ‘independence’. Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests. Central banks in major democracies around the world have similar independence”…of course, it’s not just that the Fed is taking heat from the White House to lower interest rates – Mr. Market spoke loud and clear in late 2019 that the Fed needed to change its monetary policy direction…consistently, for years now, the Fed has also over-estimated inflation concerns…however, whether the market’s high expectations will be satisfied regarding the extent of rate cuts is questionable – currently, the market is anticipating 75 basis points of easing this year and nearly 50 basis points next year…
6. The Dow has climbed 57 points through the first 30 minutes of trading…a handful of stocks have been doing the heavy lifting on the S&P 500 this quarter…5 of the largest stocks (Microsoft, Facebook, Amazon, Disney and Apple) have contributed one-third of the gains…in Toronto, the TSX is off 4 points as of 7:00 am Pacific…after touching Fib. resistance at 227 shortly after the open yesterday, the Gold Index slipped to 216 in early trading this morning…accumulating on pullbacks remains the winning strategy…Gold Index downside risk is limited…the Venture, which was hurt yesterday by declining marijuana stocks, has slipped 2 points to 577…GoGold Resources (GGD, TSX) has drilled 32 m grading 3.2 g/t AuEq, including 0.80 g/t and 178 g/t Ag, at its recently acquired Los Ricos Project located about 100 km northwest of the city of Guadalajara, Mexico…“We are very encouraged to see so much of the Los Ricos vein remains in place so close to the surface. Underground mining in the early 1900’s focused on the highest grade Silver mineralization over widths of 1 to 3 meters, but they left 75 to 90% of the mineralization in place,” stated Brad Langille, President and CEO…Japan Gold (JG, TSX-V) has commenced Phase 1 exploratory drilling at its Ohra-Takamine Project on the southern island of Kyushu, following approval of its drill program by Japanese authorities…drilling will consist of an initial 4 drill holes, (~2,100 m) to test an open-ended, 3.5 km corridor of alteration and epithermal mineralization…the alteration corridor is host to 3 historic Gold mines…the company is also expected to soon start a 2nd drill program in North Hokkaido…Africa Oil (AOI, TSX) has signed heads of terms agreements with the government of Kenya and the company’s joint venture partners for the development of the Oil fields in the South Lokichar basin…“This is a material and encouraging step forward which gives all parties confidence that the development project will be robust at low Oil prices,” stated CEO Keith Hill…“In addition, the completion of the Front End Engineering and Design studies for both the upstream and midstream, together with recent market soundings provide increased confidence in the project’s capital expenditure estimate and construction timetable that is expected to see first Oil 3 years after the Final Investment Decision (FID)”…
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