Gold was soft in overnight trading, dipping in Hong Kong as recent gains have Chinese physical buyers sitting out to some extent. Gold recovered to to slightly above the Thursday close in Europe, as the Cyprus question lingers, then shot up to $1,618.50 at the COMEX open. This action was likely short-covering, as the price is stair-stepping slightly lower. TD Securities opines that the large number of gold options open at $1,600 will keep prices near that level until options expiry on Monday.
Silver traded mostly unchanged overnight, and saw the same jump on the COMEX open as gold, hitting $29.46/oz. As of 10am, it is holding on to most of that boost.
In Europe, the euro and euro stocks are lower, and not just over the Cyprus situation. The Markit Euro-composite PMI dropped from 47.9 to 46.5, a 4-month low, versus an expected improvement to 48.3. It signifies that the business output is deepening its contraction. This news continued the flight into German bonds.
As far as Cyrpus, the government has decided to keep all banks closed through the weekend, as it turns to Russia for help. Many Russian corporations and ultra-wealthy individuals use Cyrpus as the Mediterranean version of the Cayman Islands, secreting away money, and taking advantage of a low 10% corporate tax rate. The ECB-proposed plan of tapping those deposits to help pay for a bailout of the Cyprus banking system has been met with outrage in Russia, with even President Putin personally condemning the idea. The ECB has said that it will cease giving money to Cyprus on Monday if a bailout plan that contains €5.8 billion contribution by Cyprus for its own rescue is not approved
In Asia, the Nikkei hit another 4.5-year high even as the yen firmed up. The news that the U.S. Federal Reserve will continue with $85 billion a month of quantitative easing was welcomed, as it reinforces the upcoming decision of the Bank of Japan to start a new round of its own QE. Chinese stocks were up only slightly, as economic numbers show that industrial output is slowly increasing.
The dollar jumped in European trading as investors sought safe haven over the Cyprus situation. It later dipped below the Thursday close before recovering. Wall St. opened flat, despite first-time jobless claims only rising 2,000 last week, to a seasonally-adjusted 336,000 claims. This was slightly better than anticipated. Volume has been light, as the Fed announcement of continued ultra-loose monetary policy was anticipated.