U.S. Futures Start Week In Red, Oil Appears Oil Appears Vulnerable

 | Aug 12, 2019 08:19AM ET

Rebound already running out of steam

US futures are trading a little in the red at the start of the week, as European indices turned flat after earlier gains in light trade.

Everyone is focused on the various political issues this week, despite there being some notable economic releases that will obviously command some attention. None of these will be released today and there’s a few weeks now until the next meeting of a major central bank so it could go a little quiet on that front, especially with various officials no doubt on their holiday’s.

One may expect a similar political calendar but this is not your typical summer. Between Matteo Salvini wanting to bring lawmakers back from summer recess for a vote of no confience in the government and the UK fast running out of time ahead of the current Brexit deadline, the political calendar is anything but empty.

And that doesn’t even take into account the ongoing trade war which has escalated in recent weeks and continues to be a major point of concern for the markets. Central banks have been cutting rates recently as the risks mounted, threatening the relative stability we’ve enjoyed for so long in the global economy.

Is gold at risk of being an overcrowded trade?

Gold is thriving in the current environment of central bank easing, risk-aversion, recession risks, low inflation and even a slightly softer dollar this month. It’s already soared back above $1,500 for the first time in more than six years and it’s not yet losing momentum. It could be argued that the trade is looking a little crowded but until momentum starts to wane, there’s every chance it will continue to thrive. Especially if central banks continue to facilitate it with more easing heading into year-end.

Gold Daily Chart