Gold prices fell through support this morning after first-time jobless claims were reported far under estimates. Spot gold is trading under $1,230 an ounce in New York — $10 lower on the day, and at a six-week low. Spot prices have fallen nearly $30 since Tuesday evening.
European safe haven demand fell sharply overnight, as optimism regarding a victory for centrist candidate Emmanuel Macron in Sunday’s presidential elections in France grew. Macron was widely considered the winner of last night’s televised debate with far-right candidate Marine Le Pen.
Precious metals demand in general are weaker today, after substantial losses after the Federal Reserve’s policy meeting yesterday. While the Fed declined to raise benchmark interest rates this month, as widely expected, it signaled a belief that the dismal economic growth of 0.7% in the first quarter was an outlier. The widely-watched GDPnow forecast by the Atlanta Fed is showing a 4.3% growth estimate for the second quarter this morning.
Platinum and palladium spot prices fell $28 and $20 an ounce respectively yesterday. Yet another fall in auto sales and a continuing glut of unsold new vehicles have analysts worried that the big automakers will soon be cutting back on production and taking big discounts on unsold inventory.
Base metals have not been immune to the sell-off, either. Iron ore prices in Asia collapsed over a growing supply glut. Add oil prices to the list, as increasing production from US drillers is maintaining a global oil glut that OPEC has been battling with production cuts. West Texas Intermediate futures were trading below $48 a barrel this morning, the lowest point since last November.
The US dollar gave up gains in Europe overnight, declining to test the 99.1 level on the DXY dollar index. Encouraging economic news in the Eurozone gave the euro a lift against the dollar. The pair are trading near a one-week high, perhaps setting up to test resistance at 1.10.
Big Economic News
Recent risk-on sentiment got several boosts today from both sides of the Atlantic. This morning’s Markit PMI numbers signaled continued growth across the Eurozone. Markit Chief Business economist noted in the report that the numbers showed “an economy that is growing at an encouragingly robust pace.” The news sent European stocks on a tear, propelling the market to a 20-month high.
In the US, first-time jobless claims came in far lower than expected, falling 19,000 from the previous week to 238,000 new claims. Economists were expecting a drop of half that. The US trade deficit also came in better than expected, holding steady at $43.7 billion instead of rising to $44.5 billion as analysts had expected.
Non-farm productivity took a big tumble in the first quarter of 2017, falling to -0.6% from a +1.8% in the fourth quarter of 2016. Wall St decided to look on the bright side of the report, which showed labor costs rising by 3% in the first quarter, up from +1.3%.
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