After slipping when markets opened on Thursday, the gold price rebounded to just below unchanged at $1,240/oz this morning, losing less than a dollar. The U.S. dollar was similarly about 0.1% in the red this morning, erasing steep overnight gains after a significantly lower number of weekly jobless claims numbers were reported. Spot silver lost just 2¢ to trade at $16.24/oz. Platinum was similarly unchanged this morning while palladium sank 1.4% to fall below $850/oz.
The Labor Department reported that first-time jobless claims fell by 15,000 last week, bringing the measure close to a 44-year low. Nominally speaking, virtually all of the unemployment metrics used by the government are at levels not seen since the 1970s. Wall St reacted positively to the news, and stock futures pointed higher on Thursday. Both the Dow Jones Industrials and the S&P 500 notched record-highs yesterday, making it likely that new high-water marks will be reached by the indices today.
While the data suggest that employers may be hesitant to lay off more workers under tightening labor conditions, some of the effect could be explained by seasonal factors, such as the rehiring of temporarily laid off factory workers in the auto sector as machines were retooled for manufacturing the new 2018 models. In any case, the overall trend for employment remains firmly in place.
ECB Turns Dovish
The major development across the Atlantic Ocean was today’s decision by the European Central Bank to leave its monetary stimulus in place. The decision to stand pat comes as somewhat of a surprise to investors, given the improved performance of the eurozone economy. It’s not difficult to understand why the ECB may be cautious about taking the training wheels off of monetary policy. This is also a fair indication that the region’s economic recovery remains fragile.
Although normalizing policy would be seen as an encouraging sign, equities markets and financial firms still prefer their central banks to accommodate everyone as much as possible. This will likely cause ECB President Mario Draghi to strike a more dovish, reassuring tone in his post-meeting remarks even as all the talk has centered around the (perhaps imminent) timing of the central bank’s inevitable unwinding of its massive stimulus program.
Stocks around the world were higher for the second straight day, coinciding with a weaker U.S. dollar as measured by the DXY index. Treasury yields were largely steady, although the short-term 3-month T-bill yield did jump 5 basis points to 1.06%.
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