Precious Metals Mangled

Too much new money and too many weak hands was the story of the last leg of the gold market. A reversal in Treasury yields on increasing supply led to a rush to the exits and a 6% decline in gold and 15% drop in silver.

The drop undoubtedly means an end to this chapter in the gold rally. There is no major support until $1800 so the decline isn't necessarily over but a period of consolidation is overdue.

More broadly, the drop in gold came alongside a series of reversals from Treasuries to yields. Stocks held up before the S&P 500 fell 0.8% late in the day with tech doubling the declines.

Tech stocks attempted a recovery when Tesla rose 6% following uts 5-1 stocksplit announcement.

In Washington, the urgency for another round of stimulus has turned to deadlock. Trump will now try to push through an executive order that will pay $300/week instead of $600/week in special benefits and won't require states to chip in. Mnuchin said it would take two weeks to get the checks out and that will mean a lean month for consumers.

In the market, the day ahead will show if metals are a canary in the coalmine or separate from broad sentiment. The FX reaction so far has been tepid but AUD/USD is at the lows of the month (and AUG is typically a poor month for AUD/USD).

NZD/USD is another spot to watch as it goes back into lockdown after a family contracted the virus from an unknown source.

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