US Stocks Flat on Earnings, but Gold Smashed – XAU down 5%
US stocks had a relatively flat day yesterday as mixed earnings results across sectors hit the market. The Dow had the best of it, finishing up 0.47% at 46,924, while tech stocks took a bit of a hit on a weaker Netflix update, the Nasdaq closing down 0.16% at 22,953 and the S&P flat at 6,735. US Treasury yields had a relatively quiet day, the 2-year flat, closing again at 3.455%, while the 10-year lost 1.7 basis points to move down to 3.963%. The dollar pushed higher against the majors, the DXY up 0.37% at 98.95. Oil prices pushed higher off recent lows, Brent up 1.03% to $61.64 and WTI up 0.39% to $57.24 a barrel. Gold and silver were the outstanding moves on the day as they experienced their biggest down days for the year, gold off 2.30% to $4,125.22 and silver down 7.48% to $48.40.
Gold Smashed in Trading Yesterday – Down 5%
Gold’s relentless recent rally took more than a breather last night as it crashed over 5% on the day, and as with the moves higher, there appears to be no real solid catalyst for the move. There was no major update on geopolitical risks, etc., and not a huge move in the dollar, so we are probably seeing some large profit-taking flow coming through the market. From a technical perspective, the move did halt nearly perfectly on the support trendline on the daily charts, and therefore traders are expecting to see more volatility in the hours ahead. A further break would open the way for a move to the next trendline support near $4,000, with the next major support after that at the September breakout level at $3,500. If the topside trend resumes, then the target will again be the recent record highs just under $4,400 an ounce.
Quiet Calendar Day Again, but More Volatility Expected
It is another quiet day on the macroeconomic calendar today, although UK data in the London session will be a focus, as will further quarterly earnings reports in the US session. The Asian session is likely to start in a relatively muted fashion today after a relatively quiet day on Wall Street, although FX and metals traders will be on their toes after the moves yesterday. The London session will see the release of key inflation numbers, with both the CPI (exp. 4.0% y/y) and PPI (exp. 0.3% m/m) data due out. We also hear from ECB President Christine Lagarde again as she continues on her recent global speaking tour. The US session will see the release of the weekly US crude oil inventory data (exp. 2.2mio barrels), and we hear from FOMC member Michael Barr, but expect volatility to come from earnings numbers and geopolitical updates.
