COMMODITIES: Gold Continues to Trade Close to Support at 50-Day EMA
WTI futures traded higher yesterday highlighting an extension of the current corrective cycle. $69.41, the 50.0% retracement of the Jun 23-24 downleg, has been pierced. A continuation higher would open $70.96 next, the 61.8% retracement point. On the downside, support to watch is the 50-day EMA, at $65.02. The average has been pierced, a clear break of it would expose $58.17, the May 30 low. Gold has pulled back from its Jul 23 high. Short-term weakness is considered corrective - for now - and a bull cycle that started Jun 30 remains intact. However, the yellow metal has traded through support at $3323.0, the 50-day EMA. A clear break of this level would signal scope for a deeper retracement and expose the next key support at $3282.8, the Jul 9 low. Key near-term resistance is $3439.0, the Jul 23 high. A break of this hurdle would be bullish.
- WTI Crude down $0.28 or -0.4% at $68.89
- Natural Gas up $0.02 or +0.67% at $3.163
- Gold spot up $6.41 or +0.19% at $3332.89
- Copper down $0.95 or -0.17% at $561.5
- Silver down $0.1 or -0.26% at $38.108
- Platinum down $4.85 or -0.35% at $1387.48
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EUROPEAN FISCAL: Italy Runs Primary Surplus In Q1, But Interest Expenses Rising
On a 4Q rolling sum basis, the Italian budget deficit ticked up a tenth to 3.5% of nominal GDP in Q1 – far less dramatic than the 8.5% single-quarter figure reported by newswires. Interest expenditures (also on a 4Q rolling basis) ticked up to 4.0% GDP (vs 3.9% prior), meaning the government still ran a primary surplus of 0.4% for the second consecutive quarter.
- In its May forecast round, the EC projected the Italian deficit at 3.3% in 2025 and 2.9% in 2026. This was similar to the Government’s medium-term fiscal plan projections presented last year (3.3% in 2025, 2.8% in 2026). Bloomberg consensus on the other hand is slightly less optimistic on 2026 fiscal consolidation, with the median analyst projecting the budget deficit at 3.4% in 2025 and 3.2% in 2026.
- Expenditures rose to 50.8% of GDP in Q1 (4Q rolling, vs 50.6% prior), with revenues ticking up to 47.3% (vs 47.1% prior).
- The debt/GDP ratio (4Q average) rose to 136.5% (vs 135.8% in Q4). The EC expects debt/GDP at 136.7% in 2025 and 138.2% in 2026 (Italian Government: 136.9% in 2025 and 137.8% in 2026). Medium-term fallout from the post-covid Superbonus scheme continues to push debt/GDP higher in the coming years, but the Government expects the ratio to begin falling from 2028.
- While Italian fiscal consolidation still appears intact, one less positive development in Q1 was the interest – nominal growth differential (“r-g”) turning positive (0.5pp minus 0.0pp in Q4). This means that interest expenses are growing faster than the economy. If the Government stops running primary surpluses with this dynamic in place, it would put total debt on an unstable and increasing path once again.
FED: Bostic Sees Firms' Tariff Uncertainty lnto 2026, MNI Livestream Later Today
Atlanta Fed’s Bostic (non-voter) on CNBC’s Squawk Box Europe: “I’m hearing more [businesses] say that they may not expect this whole thing [response to tariffs and other economic factors] to play out, to where they’re at their final strategy, till even 2026, so this could be a much more extended period than I think many expect,”
Bostic spoke to Reuters last week, reiterating his view for just one 25bp cut late this year.
A reminder that MNI has a livestream with Bostic later today at 1000ET/1500BST. You can register for an in-depth discussion on the economic outlook here: https://mni.marketnews.com/RaphaelBostic
ECB: Dovish Commentary from ECB VP De Guindos On Growth, Inflation
- "*ECB'S GUINDOS: FACING `BRUTAL UNCERTAINTY'" Bloomberg
- "*ECB'S GUINDOS: 2Q, 3Q GROWTH WILL BE ALMOST FLAT" Bloomberg
- "*ECB'S GUINDOS: CONSUMPTION AS A DRIVER HASN'T HAPPENED" Bloomberg
- "*ECB'S GUINDOS: CONSUMPTION BEING HELD BACK BY UNCERTAINTY" Bloomberg
- "*ECB'S GUINDOS: SEEN REMARKABLE SERVICES INFLATION DECELERATION" Bloomberg
- "*ECB'S GUINDOS: CURRENT INTEREST RATE POSITION IS CORRECT" Bloomberg
In its June projections, the ECB projected real GDP at 0.2% Q/Q in Q2 and -0.1% Q/Q in Q3.
