In the US, the labor market in recovering well and it’s almost back to full health although the inflation is still low according to Fed’s Vice Chairman, Stanley Fished, in yesterday’s press-conference. Also, it was explained that these levels of inflation are mostly due to the corrosion of the oil price, but an additional tie-breaking factor can be the decline of raw materials prices. According to Stanley Fischer, these reasons are only temporary disruption points and they will rebalance at a certain moment in time, so the Fed will need to take into consideration this fact and adjust its decisions going forward. The PCE (Personal Consumption Expenditures) Index – Fed’s favorite inflation indicator – went up in June with a yearly amount of 0.3%. Prices excluding energy and food climbed as well with 1.3%, still under the Fed target of 2%.
Staying in the US sphere, the President of the Federal Reserve Bank of Atlanta, Dennis Lockhart, told to the press that there is assumingly little time until Fed is going to raise the rates, as soon as there will be enough economic data to sustain the decision. He pointed that the economy is doing better and better since the beginning of 2015, probably being able to sustain a rate rise in the near future.
The most important impact these two speakers had is that the public opinion of a rate hike in September has no more ground, inflation still remaining one of the most important concerns of the Committee.
The price of crude started climbing up since yesterday’s session opening, WTI’s (West Texas Intermediate) barrel reaching the $45.00 area. The bearish sentiment that lurked around the US dollar was one of the main reasons for the oil price boost, managing a comeback from yearly lows around $43.30 on Monday morning. Today’s comeback is only a singular event, the global scenario remaining unchanged: a severe concern about the oversupply of oil combined with China’s poor economic data release. These events set a high probability for another gap in crude oil price.
Regarding gold, yesterday’s trading helped the prices break the $1,100per ounce resistance, closing a third session in a row with gain. Fischer’s and Lockhart’s declarations yesterday were the key factors that allowed this hike. In percentage, Gold gained 0.80% reaching $1,102.90 per ounce. If the trend will break July 21st’s $1,110.20 per ounce, there is a strong possibility for a jump towards $1,145.81 (peak of July 24th) or even $1,145.81 (peak of July 17th). If the growth direction shifts 180 degrees, we should look at the $1,072.30 support line set by 2015’s low from July 24th, going down to $1,045.20 (lowest of January, 2010).
