U.S. equities continued their rally this morning, as the good feelings from last week’s dovish Fed announcement are spilling over into today’s trading session. The dollar is down slightly off of its recent high of 89.6 on the DXY spot index, but is still strong ahead of tomorrow’s unveiling of an array of important economic data. Gold, silver, and platinum were all down slightly, although palladium jumped 0.8% in early trading to $812.75.
Gold edged slightly higher in early morning trading on Friday while the stock markets opened mostly flat before again venturing into the green. Crude oil benchmarks climbed well over 2% each after yesterday’s continued declines left both WTI and Brent below $60 at close. With the dramatic midweek rally in stocks, it seems the markets have calmed down a bit heading into the last weekend before Christmas. Friday may be characterized by volatility on the “quadruple witching session,” which is the simultaneous expiry of stock index futures, stock index options, individual stock futures and individual stock options. This confluence of events only occurs four Fridays each year.
Gold is higher in New York on physical buying and safe haven demand, after hitting two-week lows yesterday after the December FOMC meeting concluded. After sleeping on the news, the markets decided it was dovish enough to warrant a rally in precious metals.
Stocks, which had notched their best day in weeks after three days of nasty losses yesterday, opened higher on Wall St. this morning and promptly rose over 1%.
The dollar saw marked volatility overnight, but is trending in New York trading over 89 on the DXY index.
At 11am EST, Gold is up $5.50 to $1194.40; silver is up 19 cents (1.17%) to $15.94; platinum is up $10 to $1196.00, and palladium is up $12 to $788.00.
Both stocks and gold rebounded modestly this morning on the expectation that President Obama will announce around noon EST that the U.S. is easing its long-standing sanctions against Cuba. The administration is seeking to finally normalize relations with the Caribbean nation, lifting trade and travel embargoes to the island for the first time in over 50 years. As part of the process of melting the diplomatic permafrost, Cuba has released captive American citizen Alan Gross, who has been held there over the last five years.
This sudden and long-awaited policy shift has overshadowed the upcoming FOMC meeting this afternoon, where the Fed’s decision on how soon to raise benchmark interest rates has been highly anticipated. Precious metals were largely flat in late morning trading, holding until the policy bombshells mentioned above take their course in the afternoon.
Although the Empire State Manufacturing Index saw a surprise drop in industrial activity in New York state, overall U.S. industrial production beat expectations by rising 1.3% after gaining only 0.1% the previous month. Similarly, industrial trends in the UK surprised with a gain from 3 to 5, despite the economic slowdown across the Channel in Europe.
Precious metals are down this morning, a day ahead of a Federal Reserve Open Market Committee meeting that may be persuaded by today’s economic news to proceed with raising benchmark interest rates in the first quarter of 2015.
Today and tomorrow will be consumed by maneuvering in the marketplace in anticipation of the FOMC’s ruling, and Chairman Janet Yellen’s press conference afterwards.
Crude prices and slowing growth in the Chinese industrial sector are weighing on stocks worldwide this morning.
Factory production for November in China grew at a 7.2% rate, something every nation in the West would kill for, but disappointing news to the global export leader. Experts were expecting a 7.5% increase.
Gold dropped about $5/oz in Asia overnight, but held mostly steady in Europe. Silver also saw a slight drop in Asia, but more than made up for it in London trading. The platinum group metals are following the previous day’s movements, perhaps assisted by automated trading.
Crude oil continues to fall, having already posted a 45% drop since the high of $107 a barrel only six months ago. The anxiety is progressing past oil-producing nations, as the developed world is now worried about deflationary pressures. Producer prices in the U.S. fell 0.2% in November, in large part because of the collapse in oil prices. The annual producer price inflation rate was reported as 1.4%. Gold saw some profit-taking on the news, and Wall St. opened lower.
A 1,200 year-old gold coin found by a metal detectorist in the West Lindsey area of Lincolnshire this August is going on the block at Spinks in London on December 18th.
The imitation Louis the Pious gold solidus, described as having “exceptional quality and artistic appeal” by Spinks, is a locally-struck version of a Frankish coin bearing the visage of Louis the Pious, son of Charlemagne. This coin is estimated to have been struck sometime around the year 816 AD, early in Louis’ reign. This is only the 13th such coin discovered in Great Britain.
-Story from the Gainesville Standard (Lincolnshire, UK)
Wall St. is grateful for a robust start to the 2014 holiday shopping season, as stocks in Asia and Europe drop. Low gas prices gave U.S. consumers a few extra bucks in their budget, just in time to take advantage of Christmas sales.
The cheerful news helped the bobbing dollar regain its footing, as crude oil stumbled from overnight levels.
Precious metals took a slight dip on the release of the consumer spending numbers, but all but gold pulled back into the green in late morning trading. Gold was still slightly under Wednesday’s close at 11am EST.