North American News
US stocks close with gains. Gains of greater than 2% for the major indices
- The shortened week is off to a positive start
The major US stock indices are closing higher on the day. The major 3 indices are closing with gains of over 2% led by the Nasdaq which rose 2.51%. Having said that, the indices are off the highs.
The final numbers are showing:
- Dow industrial average him rose 641.47 points or 2.15% at 30530.24
- S&P index rose 89.95 points or 2.45% at 3764.80
- NASDAQ index rose 270.96 points or 2.51% at 11069.31
- Russell 2000 rose 28.33 points or 1.7% at 1694.03
The Dow industrial average has been down 11 of the last 12 weeks. That has never happened. The NASDAQ and S&P are down 10 of the last 11 trading weeks.
Looking at the Dow 30, Disney and Home Depot were the only stocks to decline (-1.04% and -0.49% respectively).
The top 3 Dow 30 stocks were:
- United health, +6.51%
- Chevron +4.18%
- Merck, +4.08%
- Verizon, +3.45%
- Walmart, +3.33%
US May existing home sales 5.41m vs 5.40m expected
- May 2022 US existing home sales data
- Prior was 5.61m
- Inventory 2.6 months vs 2.2 months prior
- Median price $407.6K vs $391.4K prior
- Prices +14.8% y/y
Commodities
Gold Price Forecast: Bears are moving in and eye break of $1,830 for $1,810 prospects
- Gold is grappling with headwinds from either side, but technically, the price is destined lower.
- The bears have moved in following a restest of important resistance on the 4-hour chart.
At $1,833.90, the gold price is trading around flat by mid-day New York trade and has stuck to a $1,830.83 and $1,843.66 range so far in a fickle trading environment. There has been some bargain hunting on Wall Street following last week’s sell of in stocks as investors move in on the energy and tech sectors, dragging the benchmarks higher with energy leading the pack.
Gold is failing to benefit from a softer US dollar and risk-on environment as the wider focus stays on the rate hike narrative. Nevertheless, all sectors in stocks are in the green and the Dow Jones Industrial Average jumped is now over 2% higher, with S&P 500 up 2.56% to 3,761 and the Nasdaq Composite 2.8% higher.
However, US 10-year Treasury yields are up over 1% which has dimmed appeal for the yellow metal, coinciding with the Federal Reserve’s biggest interest rate hike since 1994 made earlier this month with more of the same expected in July from the US central bank.
Gold prices remain anchored after Chair Jerome Powell tactfully manufactured a sell-the-news rally following a 75bp hike. Additionally, and as analysts at TD Securities pointed out, ”with equity markets trading in bear-market territory, gold offers an attractive less correlated stream of returns than other traditional havens.”
”For the time being, these forces have allowed gold to avoid a large-scale liquidation event, but proprietary traders continue to hold a massive amount of potentially complacent speculative length in the yellow metal. Ultimately, this still leaves the bias to the downside under the weight of a hawkish Fed.”
In this regard, this week’s main event will be Fed Chair Powell’s semi-annual monetary policy report to Congress. ”Given the dramatic breakout in inflation, we expect Powell to robustly emphasise the Fed’s inflation credentials in front of lawmakers who face mid-term elections in November,” analysts at ANZ Bank explained.
Central banks in general are moving in line with the European Central Bank looking to soon move to incremental 50bps moves and the Bank of England singing from the same hymn sheet, seeking to step up the intensity of its tightening.
ECB President Lagarde re-iterated guidance this week that interest rates will rise 25bp in July. Analysts at ANZ Bank noted that the ECB is accelerating work on an anti-fragmentation tool and argue that the latter is ”necessary to enable the ECB to raise interest rates and meet its 2% inflation target over the medium term.”
”We think once the anti-fragmentation tool is designed and adopted, it will pave the way for a more rapid tightening in monetary policy.”
Stronger rate hikes, rising yields and strengthening currencies are a headwind for gold and the sell-off in the equity markets hasn’t added any safe-haven demand.
On the other hand, investors are watchful for whether the central banks can balance out the risks of higher rates and stronger currencies vs. the gloomy economic backdrop and increasing supply risks which could ultimately serve to support gold in the longer term. Inflation and economic uncertainties usually spur safe-haven buying of gold but rising interest rates increase the opportunity cost of the non-yielding bullion.
Silver Price Forecast: XAG/USD seesaws in the $21.70-90 range on broad US dollar weakness
- A risk-on market mood was no excuse for silver to advance, boosted by a soft US dollar.
- US Treasury yields fell, except for the 10-year TIPS, a headwind for silver prices.
- Silver Price Forecast (XAG/USD): In consolidation in the $21.50-$22.00 range.
Silver (XAG/USD) snaps two consecutive days of losses and edges higher by 0.50% in the mid-North American session as US traders return from a long weekend. At the time of writing, the XAG/USD is trading at $21.70, gaining $0.10.
Global equities are rallying, depicting a risk-on mood. In the meantime, the greenback is almost flat, as illustrated by the US Dollar Index, parked around 104.412, down by 0.01%. The US 10-year Treasury yield ascends three basis points, sitting at 3.298%, failing to drag the white-metal price down.
In the meantime, the US 10-year Treasury Inflation-Protected Securities (TIPS), a proxy for real yields, shifted positive and is yielding 0.696%, up by one basis point, a headwind for precious metals prices.
During the day, XAG/USD reached a daily high of around $21.94, but buyers lacked the strength to challenge the $22.00 figure, last tested on June 13. Consequently, the silver price fell, though it stayed around the $21.70 area.
Data-wise, the US economic docket featured some Fed speaking. Thomas Barkin, Richmond’s Fed President, commented that he decided on 75 bps in June on the University of Michigan (UoM) Consumer sentiment and inflation expectations reports. Furthermore, he added that 50 or 75 bps in July are reasonable and commented that inflation would go down once supply chain issues are resolved.
Earlier, the Chicago Fed National Activity Index for May came at 0.01, the lowest in eight months, trailing April’s 0.40. Of late, US Existing Home Sales dropped by 3.4% to 5.41 million in May 2022, the lowest level since June 2020.
In the week ahead, traders should prepare for Fed Chair Jerome Powell’s appearance at the US Senate Banking Committee, where he will be questioned about the US economy.
Silver Price Forecast (XAG/USD): Technical outlook
XAG/USD illustrates that the non-yielding metal is consolidating, though forming a bullish flag, within the $21.50-$22.00 range. Nevertheless, unless XAG buyers achieve a daily close above $22.00, silver bias will remain headed to the downside. Additionally, a two-month-old downslope trendline passes near the $22.00 figure, which means that any test could find some sellers lying around.
That said, the XAG/USD’s first resistance would be June 16 high at $21.96. Break above would expose the $22.00 mark, followed by the trendline mentioned above near $22.10. On the flip side, the XAG/USD first support would be $21.50. A breach of the latter would expose the May 19 swing low at $21.28, followed by a test of $21.00.
WTI crude oil settles at $109.52
- Up $1.53
The price of WTI crude oil futures are settling at $109.52. That’s up $1.53 on the day.
The high price reached $111.16. The low price extended to $106.82.
The July contract went off the board today settling at $110.65 up $1.02 or 0.93%
EU News
European equity close: Nice bounce but gave a bit back in the latter half
- You would have liked to see ongoing strength
- UK FTSE 100 +0.4%
- Stoxx 600 +0.4%
- German DAX +0.2%
- French CAC +0.7%
- Italy MIB +0.3%
- Spain IBEX -0.6%
Other News
Target CEO: There is a tremendous amount of uncertainty in consumers
- Recall Target warned about earnings due to excess inventories
The Target CEO is on the wires talking about the economy as it relates to his company. Recall a couple weeks ago, target lower their expectations due to lower margins due to high inventories and increased costs
Today he says:
- Tremendous amount of uncertainty in consumers supply chains are not getting better
- High fuel prices are likely to linger.
- US cannot afford labor disruptions at ports
- Will be watching food sales and miles driven for July 4
Cryptocurrency News
Bitcoin ticks above its 200 hour MA. Buyers make a play
- First time above 200 hour moving average since June 10
The price bitcoin is higher on the day, and in the process has been able to extend above its falling 200 hour moving average. That moving average currently comes in at $20,868.17. The current price is trading at $21,377.
The move above the 200 hour moving average is the first since June 10. Since the last peak on May 31 at $32,375, the price declined -45.66% to the low price reached over the weekend at $17,593. Dip buyers entered, and the price has wandered back to the upside of the last few days.
Buyers have now been able to get and stay above the 100 hour moving average at $19,972, and is now trying to extend and stay above the 200 hour moving average at the aforementioned $20,868.
Short-term risk can be defined against those levels. A move below the 100 hour moving average and all bets are off for the upside in the digital currency.
On more momentum to the upside, the 38.2% retracement of the move down from the May 31 high comes in at $23,239.90. Get above that level and the door opens up for a further move toward the $25,000 level where the 50% retracement is near..