BREAKING: Reuters India is reporting that the Indian government is set to scrap the controversial “80:20″ gold import rule, according to television stations are are citing government sources.
Saudi Arabia blocked motions by smaller producers at yesterday’s OPEC meeting to reduce production levels for the oil cartel.
Crude oil futures took a nosedive, with West Texas Intermediate hitting an intraday low of $67.75, and Brent crude dropping to $71.12. Currencies of oil-producing nations such as Canada and Russia plummeted, as did precious metals. This led the dollar solidly higher. The yield on the 10-year Treasury note hit 2.20% this morning, as foreign money runs to U.S. bonds due to the increased deflationary pressures in the EU and Japan due to the OPEC decision. Consumer prices in the EU rose only 0.3% in October, matching a five-year low. Inflation fell for the third month in Japan, due to falling oil prices.
First-time jobless claims hit an 11-year high after rising 21,000 this week for a total of 313,000 new claims. Most forecasts predicted a drop from last week’s numbers, so this jump indicates that slack remains on the U.S. labor market.
Wall Street opened mixed as disappointing core capital goods orders numbers reversed the dollar’s recent gains. The falling dollar allowed the euro to pull above two-year lows.
Physical gold buying in Asia saw an uptick as gold crossed below $1,200/oz. The yellow metal dipped in European trading following comments from the European Central Bank about impending quantitative easing measures. Silver was mostly flat in overnight trading as it seems to have stabilized above $16.50, while platinum has been seeing gains on supply concerns.
Markets got an early morning surprise today, when third quarter GDP in the U.S. was revised upward rather than downward. The revised print was +3.9%, up from +3.5%.
Gold dropped below $1200 and the dollar briefly touched a five-year high before both reverted back to previous levels.
At 10am, gold was unchanged from Monday’s close at $1198. Silver was up 1%, platinum up 1.33%. and palladium .63%. The dollar suddenly plummeted at 10am, as consumer confidence in the U.S. was reported at a five-month low. Wall St., which had opened higher, was also brought lower by the news. Crude oil is rebounding slightly, with West Texas Intermediate near $76.50 a barrel, and Brent around $80.30.
Spot gold eased slightly overnight from Friday’s close of $1,202 an ounce. as large traders and speculators attempt to move the market ahead of options expiry today at 1:30pm ET. Morning spot silver in New York is basically unchanged, platinum is down a half-percent, and palladium up a half-percent.
An unexpected increase in the German Ifo business confidence survey helped boost the euro, which brought the dollar down below Friday’s close after hitting an early four-year high.
Global stocks are up on the afterglow of China’s surprise interest rate cut, helped by the Ifo survey. The Chinese central bank expressed a willingness today to make further cuts if necessary, to reverse an almost three-year decline in wholesale prices. Falling revenues have been causing a surge in corporate loan defaults. An increase in market liquidity could spark higher physical gold sales in China.
Lots of bullish news for gold this morning, as the yellow metal is set to post its third straight week of gains.
Firstly, China caught everyone by surprise by announcing cuts in benchmark interest rates, and promising to inject liquidity into the market to alleviate a credit crunch.
This was followed by European Central Bank president Mario Draghi vowing the the ECB would move quickly to reverse deflation in the EU, and would use Fed-style outright bond purchases of sovereign debt if necessary.
These moves sent global stocks, commodities, gold, and the U.S. dollar all higher.
However, the most shocking news in the gold markets was the revelation by the Dutch National Bank that the Netherlands secretly repatriated 122.5 metric tonnes of gold from the U.S. This accounts for a full 20% of Dutch gold reserves, and brings the amount stored in New York from 51% to 31%. Major Dutch newspaper De Telegraaf quoted a DNB official as saying: “It is no longer wise to keep half of our gold in one part of the world. Maybe that was desirable during the Cold War, not now.”
This news has the Germans wondering why the Bundesbank has failed to repatriate German gold from the U.S. After being convinced to not demand immediate delivery of 300 metric tonnes of gold from the New York Federal Reserve Bank, Berlin agreed to spread the repatriation out over eight years. But, instead of the 37 tonnes they were promised last year by the U.S., they only received 5 tonnes of gold Read this report by Dutch gold expert Koos Jansen for all the details.
Despite the stronger dollar and rallying stock markets this morning, spot gold is up over $9 to break the $1200 mark again. Silver is up 1.5%, and the PGMs are both up around 2%.
Spot gold regained most of Wednesday’s loss overnight, and is bouncing in a $5 range in New York in reaction to various economic reports. Physical buying in Asia increased after spot gold posted a $14.40 loss that brought it back to the $1,186 support level.
Silver is back to painting an almost identical chart over the last three days, after yesterday’s move by one or more large players used poll results on the Swiss gold referendum to flush both gold and silver stops out on the downside and the upside.
Platinum erased all of yesterday’s losses overnight, while palladium has gained slightly on yesterday’s close.
The dollar is seeing its highest volatility in 9 months, jerking above and below unchanged after bleeding off overnight gains in late London trading. Wall St. opened lower on disappointing economic growth reports out of the EU and China. This news also has European stocks trading lower. Crude has reversed yesterday’s losses, trading up nearly $1.00.
Gold made a stab above $1,200 in late trading in London for the second straight day as the yellow metal is primed to again test this resistance level. After gold recently broke through resistance at $1,186.70, this price became the support level at the 50% Fibonacci retracement. Meanwhile, the 38.2% Fibonacci retracement is now at $1,235.30.
The glow of recently announced mergers and acquisitions outweighed fears of an impending recession in Japan as the Dow Jones hit another record high on Tuesday and the S&P 500 followed suit on the strength of healthcare stocks. There have been $1.5 trillion in mergers this year involving U.S. companies, the most in nearly 15 years. Stocks opened modestly in the red on Wednesday, as did the precious metals, ahead of Wednesday afternoon’s release of the FOMC meeting minutes.
A big surprise in German economic outlook boosted the euro today, which softened the dollar and added fuel to a short squeeze in gold.
Spot gold broke above the psychologically-significant $1,200 mark in early trading before profit-taking set in in New York. Gold had started a new rally even before the ZEW economic sentiment survey was released. Physical buying in Asia is reported to be picking up as gold prices seemed to be holding the rebound from recent lows. Sales out of the Shanghai Gold Exchange were already 90% of last November’s level on Monday. Gold Forward rates are still at their lowest in 14 years, but are attempting a halt to their slide.
Deeply negative GOFO rates as we are seeing now is an indicator of a shortage of leaseable COMEX and London physical gold. The huge physical outflows from the West to Asia since 2013 after the big drop in prices is reducing the amount of gold in the West. The situation is being exacerbated by economic sanctions against Russia for their seizure of Crimea. Mining companies in Russia are unable to export their gold to the West, so the Russian central bank is buying it up to keep them in business.
While this Russian gold may come back into the market in the future, it is doubtful that any of the gold sold to Asia will be seen in Good Delivery trading warehouses again.
Silver is up-and-down above unchanged, after gaining modestly in Europe. Platinum gave up an almost $15 gain in Europe to trade slightly above unchanged in New York, while palladium has been patiently since the Asian open.