Precious metals are bracing for a long list of economic data this morning, as gold prices are down slightly from six-week highs. There has been some mild profit taking by traders early today ahead of the full slate of economic reports. Spot gold is down three dollars to $1,266 an ounce, and spot silver has given up 13 cents to start the day's trading.
Consumer spending in June barely inched higher, while personal income was flat. The Personal Consumption Expenditure (PCE), which is the Federal Reserve's preferred measure of consumer spending remained at 1.5%, is still trending under the Fed's threshold of 2%.
Gold prices blipped down to $1,263 an ounce on the report's release, but recovered to the $1,266 level almost immediately. Reports this morning of worse than expected construction spending combined with a huge drop in auto sales to lifted gold six dollars in the span of a few minutes to wipe out the rest of the earlier losses and post a $4 gain over yesterday's close.
Ford Motor Co. announced a 19.4% drop in passenger car sales for July, sending their stock down 7.5% in extremely heavy selling. General Motors also reported a huge drop in auto sales, with 14% fewer passenger cars sold last month.
Crude oil gave back some of Monday's big gains on news that OPEC members are cheating on their agreement to cut production and support prices.
Taken together with the drop in auto sales and construction spending, the pullback in oil prices signals weak inflation pressures, and reduces the odds of an interest rate hike by the Fed at their September meeting. The CME Group FedWatch tool this morning calculates the odds of a rate hike next month at only 1.4%.
The weak economic news is keeping pressure on the dollar, which is struggling below the 93 level on the DXY dollar index against six major foreign currencies. A much stronger euro is adding to the pressure on the greenback, as the economic picture in Europe improves.
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