After closing above 2,000 yesterday the S&P 500 traded flat early on as investors on Wall Street struggled to justify higher equity values owing to a lack of economic data releases throughout the day. Both the S&P 500 and DJIA were swinging between marginal gains and losses at the time of writing as the rally in risk assets showed little sign of derailing with investors largely holding the view that geopolitical tensions would continue easing. Renewed optimism in the US economy has also seen global stock markets rally higher as investors seek out higher yields.
Spot gold prices struggled to lift above the 200 day MA for a second straight session today, holding firmly below $1,285/oz towards the end of the European session. The yellow metal seems to have found firm support towards $1,275 after shedding over 3.5% as prices pulled back from the August high of $1,322.76, however, gains remain underpinned at the 200 day MA with prices having settled into a sideways trend. With US Q2 GDP data, pending home sales, and initial jobless claims all due out tomorrow we could see gold prices break out of the recent range as investors react to any surprises. Market participants polled by Bloomberg expect the secondary reading of Q2 GDP to come in at 3.9%, slightly below the preliminary reading of 4.0% while initial jobless claims are anticipated to have reached 300K during the week ending 23rd August.
For now though, confidence in the US economy remains firmly on track despite the dollar index pulling back from a 13 month high today. The index reached a year-to-date intraday high towards 82.727 earlier today before selling off sharply below 82.50 where levels have stayed throughout the afternoon. Investors remain cautious to any shifting in policy from central bankers and with the dollar index rallying 3.75% since the start of June we could see further gains as the dollar market outperforms its peers, notably the euro and the yen.