Gold Price Struggles Below $1,220/oz | July 31, 2018
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Gold Price Struggles Below $1,220/oz

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Gold Price Struggles Below $1,220/oz

The precious metals floundered in early trading Tuesday, the last trading session of July.

Gold prices slumped to about $1,216 per ounce, down $5 (-0.4%).

Spot silver fell farther, losing 0.5% (-8¢) to trade below $15.40/oz. Platinum and palladium were each around unchanged.

Housing Market In Focus

Home prices in the United States have continued to rise, but it appears at a somewhat slower pace than other economic factors would suggest.

The Case-Shiller home price index was up 6.5% year-on-year during May. However, this actually represents a deceleration from earlier readings. Tariffs on aluminum and lumber have increased costs for builders, so the supply of new homes remains tight.

Aside from housing data, the latest inflation numbers were also released Tuesday. As measured by the personal consumption expenditures (PCE) index, core inflation has risen 1.9% year-on-year. This is within striking distance of the Federal Reserve's target of 2.0% price inflation per year.

Like the housing market, the direction of inflation could be influenced by the White House's trade war. Tariffs tend to increase manufacturing costs, which is then passed on to consumers.

Wall St posted modest gains this morning, with all three major indices advancing about 0.5%.

Meanwhile, the dollar recovered from early losses to trade at 94.25 on the DXY index.

This lifted the euro to $1.1725, yet the pound sterling was steady above $1.314.

Central Banks Hold Keys

Tomorrow kicks off the FOMC's two-day policy meeting. Few expect the Fed to make any changes to interest rates in August, as no post-meeting press conference is scheduled. Rate hikes are expected in September and December, however.

It's a busy week of central bank meetings, in fact. Across the Pacific, the Bank of Japan somewhat surprised markets by standing pat on its quantitative easing program. The BOJ had previously indicated it may reconsider the policy due to its lack of success in stoking higher inflation.

The decision sent the yen lower to ¥111.8 per dollar.

In the meantime, the Bank of England will meet on Thursday. The central bank is likely to raise interest rates this month as it embarks on the tightening cycle that the Federal Reserve has pursued for the past three years.

Estimates for gross domestic product (GDP) growth during the second quarter will also be published in the U.K. Thursday. In the U.S., Q2 GDP is currently forecast to be north of 4.0%. This may be a sign that growth will disappoint in the third quarter.

Crude oil prices followed the precious metals lower. WTI crude lost nearly 1.7% to below $69 per barrel while Brent crude slipped 0.9% to $74.30/bbl.

Bonds saw a bit of demand, pushing the 10-year Treasury yield down two basis points to 2.95%.

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.

About the Author

Everett Millman

Everett Millman

Analyst, Commodities and Finance
Managing Editor

Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.

In addition to blogging, Everett's work has been featured in CoinWeek, Advisor Perspectives, Wealth Management, Activist Post, and has been referenced by the Washington Post.

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