Consumer prices in April were reported slightly down from March, but core CPI, which ignores energy and food costs, increased by 0.3% from last month, the largest one-month gain in two years.
This sent the dollar popping up out of negative territory, with the idea that core consumer inflation, reported at an annualized 1.8% rate, could put a rate hike by the Fed back on the table.
The sudden gain in the dollar reversed a mild rally in gold in New York, which is denominated in dollars.
Weaker than expected wholesale price reports out of Europe and the U.S. have stocks on both sides of the Atlantic on the back foot this morning, continuing the shaky trading of the last few days.
Gold held steady overnight, but saw some minor consolidation at the New York open to pull the price under the $1,210 mark. Silver continues steady this morning from Wednesday’s close.
Crude oil is up over 1% in New York, as ISIS advances in Libya, Syria, and Iraq make headlines. The dollar lost ground in late trading in Europe, as ECB meeting minutes showed the central bank happy with early results from their quantitative easing program, and saw deflation risks abating.
Markets are assuming the usual holding pattern ahead of the release of the Federal Reserves Open Market Committee meeting minutes scheduled for 2pm Eastern time today.
Gold is just above unchanged, while the various white metals gain modestly this morning. At 10 am, spot gold was up $3.40 to $1.211.40, while silver had gained 14 cents to $17.22. The platinum group metals (PGMs) have also seen slight gains.
The dollar is up slightly this morning, retaining a modest pressure on gold after two days of solid gains for the greenback. European stocks are down, and Wall St. has opened lower. Crude oil is rebounding a bit after recent losses, up around 1% in early trading.
Euros raining from the sky!
The European Central Bank lit a fire under EU stocks and bonds in a surprise announcement today, announcing that it would accelerate its bond purchases through May and June (aka print more money, faster.)
This hit the euro common currency hard for the biggest daily loss in two months, sending it below 1.12 against the dollar. This gave the dollar a big boost overnight.
The strong dollar is wiping out the minor organic gains gold was seeing (at least when priced in USD,) sending it down $10 an ounce. After a very good last two weeks, this central bank-fueled correction doesn’t really change the short-term bullish outlook for gold. Gold is still rising this morning in euros, pounds sterling, and rupees.
Gold spiked to a three-month high, and silver popped up close to a four-month high, as the Financial Times reports that the IMF last week considered implementing “The Cyprus Plan” on Greece, once it runs out of money. The socialist government in Athens still believes that they can threaten to take the entire EU down with them in order to get concessions from their creditors, but the EU, ECB, and IMF say they are prepared to contain any financial contagion if the beleaguered Mediterranean nation goes down the tubes.
Greek jitters this morning have European stocks and the euro currency lower. The dollar is moderately higher, while Wall St. opened mixed in volatile trading.
Gold is consolidating this morning, locking in some of the $35 an ounce gains it has logged since Monday. This is driven in part by the dollar attempting to pick itself up from a four-month low.
At 10 am in New York, spot gold is down almost $2 to $1,219.30 an ounce, while the DXY dollar index is up nearly half a percent to just under 94.
Wall St. gave up gains early after opening higher, and is hoping to extend yesterday’s rally after its recent losing streak. West Texas Intermediate Crude continues to slide this morning after recent rallies, down 1.6% to under $59 a barrel.
Are you new to precious metals investing? Wondering why people want to buy “junk” silver, or what “fineness” is? Our friends at the Perth Mint Bullion Blog have put together a quick little glossary of terms to get you started.
We’d like to add a little something to that list: ASW and AGW stand for “Actual Silver Weight” and “Actual Gold Weight,” and correspond to “fine weight” in the Perth Mint article. The ASW is the amount of pure silver contained in the coin’s alloy, and AGW is the amount of gold contained in a coin’s alloy.
Gold touched a six-week high in overnight trading, and is near a five-week high early in New York. Silver is near three-months highs, over $17.25 an ounce.
The dollar is at a four-month low and dropping, while the euro continues to gain, giving investors on the Continent an easier time of moving into gold as a safe haven against a Greek sovereign debt default.
Producer prices dropped in the U.S., but may be countered by a drop in first-time jobless claims to allow stocks to regain their footing after recent heavy losses. Bonds (except for Greece) are mostly steady this morning, after several days of large losses.