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USAGOLD/Peter Grant/08-14-17
Gold is trading modestly lower, having recovered about half of the losses off of Friday’s high at 1292.05. While the North Korean situation did not escalate over the weekend, it certainly is not going away, so the uptick in risk appetite to start the week is unlikely to be sustainable.
The rebound in the dollar has been tentative at best, suggesting the bias there remains to the downside. The greenback faces some serious headwinds with the Fed’s tightening cycle on hold for the time being — and perhaps even over — along with some fairly significant challenges to the Trump economic agenda.
When Congress gets back from the August recess, the debt ceiling is going to have to be dealt with in fairly short-order. Treasury Secretary Mnuchin has warned that the debt ceiling will have to be raised (or suspended) by September 29 to avoid a default on some payments.
That will leave the House and Senate just a dozen joint working days to hammer out a deal. However, Mnuchin’s hope for a clean debt ceiling bill seems like a long-shot. That will certainly contribute to risk aversion in the weeks ahead.
July retail sales comes out tomorrow with a 0.4% rebound anticipated. If this proves overly optimistic, there would be negative implications for Q3 GDP revisions.
Gold remains just off the highs for the year, as it moves into its seasonally strong period. With geopolitical, political, growth and price risks all highlighted, the last four months of the year could prove exciting for the yellow metal indeed.
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