Markets Rebound On High Volatility: Morning Market Update Oct 21

10945992_xxlThe dollar is seeing some volatility this morning, as the the DXY dollar spot index has been undulating above and below the 85.0 mark. In fact, the markets at large have been characterized by volatility the last several trading days, as the volatility index is at a 13-month high. This comes just three months after the index hit its lowest ever reading.

Part of the reason for the volatile trading is that big banks are being constrained by the new regulatory rules for holding capital. They cannot hold as much corporate debt as they were before, and are uninterested in buying the assets that clients want to sell, as the banks themselves are selling off “junk bonds” and similar high-risk securities. In an effort to create greater transparency in the securities markets, financial regulators are nearing a resolution on loosening requirements for government-guaranteed loans, particularly rules relating to mortgages.

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Gold Above $1245 on Stock Weakness: Morning Market Update Oct 20

Disappointing profits reports from technology giants SAP and IBM pulled European stocks and the Dow down after an upbeat Friday.

This led spot gold to push above the $1,245 mark, after a close barely below unchanged on Friday. Fears of a 2008-style crisis in the European Union, and increased last-minute physical demand ahead of the Diwali festival in India helped gold post moderate gains overnight.

Silver, which also saw modest gains overnight, is shooting straight up in early New York trading to break above $17.50. Platinum saw a small jump at the Hong Kong open overnight, riding that gain in steady trading through the London trading day. Palladium is just above unchanged.

The dollar gave up mild gains to fall to near unchanged in early  morning trading in New York. Brent crude is down over 50 cents to below $86, while West Texas Intermediate is below $83. Stubbornly lower crude prices are squeezing oil producing nations world wide.

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Fed Prez Mulls More QE as Ebola Concerns Grow: Morning Market Update Oct 17

diversifyAfter stocks were on the decline all week, a leak from the Fed made the markets feel all better. It was reported on Wednesday that last week, in a private meeting, Federal Reserve Chair Janet Yellen had expressed confidence in the outlook for economic growth. Stocks almost immediately stabilized and ended the day only slightly in the red.

This “coincidentally” well-timed leak was followed by comments from St. Louis Fed President James Bullard that the central bank should consider delaying the end to quantitative easing in order to halt a potential decline in inflation. Bullard touted the U.S. recovery, citing that economic numbers remain strong, and suggested that the U.S. would be largely insulated from the instability in Europe. How those assertions would warrant an extension of QE–of which Bullard is widely credited as the architect–remains unclear.

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Positive Data Can’t Save Stocks: Morning Market Update Oct 16

First-time jobless claims coming in far lower than expected, plus a surprise increase in industrial production in the US has not been enough to keep stocks from continuing a sell-off.

A vicious bond sell-off in sovereign debt for the Mediterranean EU countries is threatening to drag the entire continent down. European stocks are sharply lower for yet another day, hitting a 13-month low.

In contrast to Greece/Italy/Spain, German 10-year bunds are in high demand this morning, with the yield dropping to 0.77%, and the 10-year T-note in the US yielding 2.08%. The yield on the Greek 10-year note is up nearly 2% in 48 hours, with the yield at 8.94% this morning.

Gold saw a tiny bit of back-filling at the COMEX open this morning after holding on to gains overnight. Silver is slightly lower after resuming an extremely tight trading band yesterday. Platinum lost ground overnight, while palladium is notably lower.

The dollar managed to pull out of its decline in European trading, getting a slight pop to barely poke its nose above unchanged. The yen is seeing safe haven demand, while the yuan is trading at a 7-month high.

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Gold Jumps on Ebola, Faltering Economy: Morning Market Update Oct 15

10945992_xxlGold spiked early in trading this morning on the release of poor economic data that indicates the global economic slowdown is deepening. The dollar dropped sharply, as the DXY index slid 73.5 basis points to 85.087, its lowest reading in two weeks.

Both crude oil prices and Treasury yields have continued to fall. Meantime, the news that a second nurse in Texas has been infected with the Ebola virus sent the markets into a bit of a panic, as the Dow tumbled nearly 200 points. It seems reasonable to assume that worsening sentiment about the government’s ability to contain the virus could result in less travel and less economic activity as consumers fear the prospect of a far-reaching outbreak.

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Gold hits 4-Week High on Global Economic Concerns: Morning Market Update Oct 13

With a weaker dollar, gold was helped overnight as short covering took the yellow metal to a 4-week high early in trading this morning before easing slightly. The dollar is down as the Fed has warned of an impending global economic slowdown that will likely delay any rate hikes in the U.S.

Fears over a pullback in economic growth around the world have coincided with a bear market in crude oil resulting from a massive supply glut and lower consumption expectations. In the meantime, equities are falling almost across the board.

Yesterday in the Markets

At Monday’s open, stocks began trading significantly down from last week, while precious metals made a most recovery. As of 10:00 am EST:

Dow Jones: 16,524.54 (-0.12%)
S&P 500: 1,911.49 (+0.28)
Nasdaq: 4,291.27 (+0.35%)

Gold: $1,229.00 (+0.60%)
Silver: $17.38 (+0.45%)
Platinum: $1,257.75 (-0.37%)
Palladium: $782.75 (-0.29%)

Economic News Affecting Gold

Gold saw robust physical demand overnight as a series of holidays are being observed simultaneously around the globe. Japan celebrates its National Sports Day today, while Canada observes its Thanksgiving. Bond sales in the U.S. are closed today in observance of Columbus Day, so when trading resumes tomorrow the yield on the 10-year Treasury note will remain at an 11-month low of 2.28% as investors pour into treasuries. The yuan was up against the dollar.

The Chinese economy saw a boost on positive data, as import prices rose 7% last month while export volume jumped 15%. This helped base metals–one of China’s most important natural resources–which in turn lifted the precious metals, as well. Commodities remain down as WTI Crude slipped below $85 and Brent Crude traded below $89, both representing four-year lows for oil. With the drop in oil prices, rumors are emerging that some of the OPEC member countries are discounting their oil prices in order to keep a steady flow of revenue coming in.

Global growth concerns are broadly affecting stocks, as Japan’s Nikkei 225 sank to a two-month low. EU stocks recovered from an early dip this morning. Elsewhere in Europe, Finland saw its AAA credit rating downgraded to AA+ by Standard & Poor’s largely on the failure of Nokia, whose downturn has had a seismic affect on the national economy. Finnish Prime Minister Alexander Stubb said that it may take up to four years to restore Finland’s economy to healthy activity levels, as the Scandinavian democracy now lags behind even Portugal and Spain in productivity.

Geopolitical News Affecting Gold

syria-iraq

ISIS continues to carry its fight to the Syrian border town of Kobani amid ongoing airstrikes from the U.S.-led coalition. Experts have noted that if these airstrikes are unsuccessful in breaking up the ISIS offensive on Kobani, the city will fall to the insurgency within days. The town, located near the Turkish border and controlled by a Kurdish community, has been under siege for about three weeks, driving some 170,000 residents from their homes.

In Hong Kong, tensions are rising between pro-democracy demonstrators and pro-government groups. As police forces are moving to re-open the city’s business districts to commerce, the student-led protesters have vowed to redouble their efforts unless their demands for elections free from Beijing’s influence are met. The government has reiterated that there is “zero chance” of a compromise on the horizon. The situation may grow ugly as the reputation (and flow of business) in Hong Kong continue to take a hit. Both sides continue to dig their feet in, as the demonstrations are estimated to have cut commercial activity by as much as 40%.

Looking Ahead

U.S. retail sales are set to be released on Wednesday this week, while the Producer Price Index (PPI) for Final Demand will also be announced Wednesday morning. This data should provide a clearer picture of how American industries are faring as we enter the final quarter of the year.

 

by Steven Cochran

Gainesville Coins Portfolio Tracker and Financial News

Jobless Claims Pull Gold from 3-Week High: Morning Market Update Oct 9

Gold hit a three week high of $1,233 an ounce in early morning trading, before a better than expected first-time jobless report muted the rally.

The dollar, which had dropped below 85 on the DXY index, caught a breather, but was unable to break into positive territory.

Stocks in Europe were revived by the jobless report, after giving up gains sparked by the FOMC minutes released yesterday.

Gold held onto yesterday’s gains in Asia and Europe, while silver surged strongly overnight before catching a correction at the COMEX open to trade up modestly. Platinum built on slight gains in Europe, while palladium rose over the $800 mark.

The 10 am spot prices in New York are:

Gold up $5.80 to $1,227.30
Silver up $0.22 to $17.60
Platinum up $8.00 to $1,282
Palladium up $4.00 to $803

The DXY dollar index is barely above unchanged, up 0.02% at 85.3120

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Russia Wants to Build “PGM OPEC” With South Africa

2flagsBloomberg is reporting that Russia’s Natural Resources Minister and officials from Russian company Norilsk, which is the largest palladium miner in the world, will attend a meeting in South Africa to once again pitch a plan for the two nations to start a cartel to influence the international price for platinum group metals.

Platinum and palladium are often found together in the same mines. South Africa produces almost 70% of the world’s platinum, while Russia mines nearly 40% of the world’s palladium. Both countries have been hard hit by the drop in PGM (platinum group metals) prices, and theoretically are in a better position to control the PGM market than the OPEC nations can influence the price of crude oil.

In order to not run afoul of international anti-trust treaties, the simplest way for South Africa and Russia to control PGM prices would be for their central banks to buy platinum and palladium and designate it as precious metals reserves.

The first question is, “where would these billions of dollars to do this come from,” and the second question is “how would you keep labor unions and state-run companies from seizing control of the pricing mechanism to suit their own needs?” Plans to sell PGMs to auto manufacturers in fellow “BRICS” countries Brazil and China to help Russia and South Africa raise capital to control the market would probably not help enough to make the plans for a “PGM OPEC” a reality.