Gold Holds Steady

Daily Analysis - 25/07/2017

Investors Focus on Fed Meet


Gold prices are holding ground near a one-month high on Tuesday, buoyed by the ongoing political uncertainty in the United States. Investor participation remains lows as they await the conclusion of a Federal Reserve meeting for fresh clues on the outlook for monetary policy.

Bullion Takes a Breather

Gold settled marginally lower on Monday to halt its streak of six sessions of gains amid a modest strengthening in the US dollar. The greenback was supported by stronger-than-expected readings on the US economy. However, the broader economic outlook remains clouded as political uncertainty creates obstacles for President Donald Trump to implement his fiscal stimulus and tax reforms agenda, which could boost safe-haven demand for gold further.

Investors are bracing for possible hints on the timing of the next interest rate hike, ahead of a meeting of Fed's rate-setting committee that begins later today. While no imminent action on rates is expected, the bullion market should remain subdued ahead of the meeting. Gold was last trading around $1257 per troy ounce, leaving the short-term uptrend intact. On the upside, a breakout above $1260 could see bullion rally to $1275.


US Existing Home Sales Slide

Sales of previously-owned homes in the US tumbled to their slowest rate since February as strong demand bumped against a dearth of properties. The National Association of Realtors said Monday that sales of existing home fell -1.80% in June to a seasonally adjusted annual pace of 5.52 million units, beating the consensus estimate anticipating a -1.00% decline to a 5.58 million-unit pace.

Compared to the same period last year, sales edged 0.70% higher. Supply remains the most important driver of US housing market, with total inventory down -7.10% from a year ago. The tightness in supply continues to lift home prices higher. The median selling price stood at $263,800 in June, marking a 6.50% increase from last year. That set a fresh record high and marked the 64th straight month of year-on-year price gains. In the meantime, S&P 500 futures are hovering within a narrow range around the 2465-mark.


German PMIs Miss Forecast

The shine in German economy might be beginning to fade after businesses reported weaker than expected growth in July in a string of closely-watched surveys. The Markit composite purchasing managers’ index, compiled from individual surveys of firms in manufacturing, construction and services, came in at 55.1 compared to a reading of 56.3 in June and below economist projections of 56.2 for the period.

Sub-indices representing the two major sectors, manufacturing and services, both missed expectations, with the manufacturing index dropping from 59.6 to 58.3 while the services index fell from 54.0 to 53.5. The tepid German figures mimic those in neighbouring France, which reported a July expansionary rate that was weakest since the outset of 2017. DAX 30 futures are off the highs of the session, with the index last seen trending near 12215.


Alphabet Posts Steep Drop in Profits

Google parent Alphabet Inc. reported a second quarter profit that slipped sharply from a year ago, stung by a big anti-trust fine levied by the European Commission. Net income stood at $3.5 billion, or $5.01 per share, compared to $4.9 billion, or $7.00 per share reported during the same period last year. The consensus Wall Street expectation was for earnings per share of $4.44. Revenue came in at $26.0 billion, up from the $21.5 billion recorded a year earlier.

The average analysts’ estimate was for total revenue of $25.6 billion. The second quarter results were depressed by the impact of the $2.74 billion fine that European anti-trust regulators levied on its Google unit. Shares ended Monday at $980.60, and were down -2.00% in post-market trading after it was revealed that marketers are spending significantly less in terms of cost-per-click advertising.


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