Gold prices hit another four-week low overnight, amplified by technical selling when stop-loss orders were triggered. Stocks are also extending Wednesday's losses, while oil futures are seeing extreme volatility on thin volume.
Traders across the spectrum are hunkering down ahead of Federal Reserve boss Janet Yellen's speech “The Federal Reserve’s Monetary Policy Toolkit,”at the Jackson Hole global central bankers conference.
Economic news today is taking on added importance on the eve of Yellen's highly-anticipated speech. Sales of core capital goods in July were reported to have grown 1.6%, far above economists' expectations of +0.3%. July's numbers are the best since January, and build on June's +0.5% reading. Core capital goods does not count commercial aircraft nor any defense spending.
Durable goods orders, comprising those capital goods designed to last for three years or more, rose 4.4% in July, more than reversing June's 4.2% drop. Economists had forecast a 3.2% gain. Commercial aircraft sales led durable goods, with a 89.9% jump, thanks to Boeing. The airliner giant received 73 orders for new aircraft, compared to only 12 orders in June.
The news boosted stocks and the dollar, while initiating selling in the Treasury market.
First-time jobless claims last week fell by 1,000 applications to 261,000, providing some stability to the job market. Analysts expected an increase of 3,000.
This news helped back up Kansas City Federal Reserve President Esther Georges' position on rate hikes. Kicking off the Jackson Hole meeting of central bankers from around the globe, George revealed that she voted for a rate hike at the July FOMC meeting. She told the assembled crowd that "I think it's time to move." While George's speech hit market sentiment, her reputation as an interest rate "hawk" softened the blow.
This speech follows recent Fed sentiment regarding taking a serious look at raising interest rates next month. Last week, New York Fed president William Dudley said that a September rate hike is "possible" in an interview last week.
If Yellen's speech tomorrow is perceived as hawkish, it may push gold prices to test the solid support line at $1,310 for the third time since late June. Some analysts believe that when a market bounces off a support or resistance line three times, it signals a new reversal about to happen. While past performance is no indication of future results, it may be something to consider.
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