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Falling Stocks Help Prop Up Gold Futures

August Comex Gold futures posted a solid gain on Tuesday. Technically, oversold conditions contributed to the rally after gold completed a three week decline last week. Fundamentally, the weaker stock market helped underpin gold since investors are turning to it to park their profits. Gains could be limited however because of bolstered expectations of an interest rate hike by the U.S. Federal Reserve and because of soft Asian demand.

GOLD BARS

July Crude Oil prices rose on Tuesday as investors reacted to a U.S. government forecasters report calling for shale-oil production to decline this summer. According to the U.S. Energy Information Administration’s Drilling Productivity Report released late Monday, oil production in the seven top shale regions are expected to fall by 91,000 barrels a day to 5.5 million barrels a day in July compared with June.

The GBP/USD was weaker on Tuesday even though Britain’s trade deficit narrowed more than economists forecast in April. The goods-trade gap narrowed to 8.6 billion pounds ($13.2 billion) from 10.7 billion pounds in March, the least in 13 months, according to the Office for National Statistics. Traders were looking for a deficit of 10 billion pounds. Exports rose 2.8 percent, with sales to non-European Union nations surging 4.7 percent.

The EUR/USD traded lower on Tuesday after reports surfaced that Greece had submitted fresh proposals for unlocking bailout funds three weeks before its financial safety net expires. Creditors are still worried about Greece even though a summit has been scheduled between Greek Prime Minister Alexis Tsipras, Germany’s Angela Merkel and French President Francois Hollande in Brussels on Wednesday. The main concern for creditors are Greece’s budget targets and the sustainability of Greek debt.

In U.S. news, the Jobs Openings and Labor Turnover Survey (JOLTS) showed 5.376 million job openings in April, the highest since December 2000. This news helped contribute to the recent optimism about the jobs market and is another reason to believe the Fed is likely to raise interest rates in September.

Wholesale inventories showed an increase of 0.4 percent in April. This number beat expectations of a 0.2 percent rise.

Finally, a report on U.S. small business confidence came out better than expected, rising to 98.3 in May, its highest level since December. 

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