Silver got a healthy boost at the COMEX open this morning after a shallow slide overnight, and gold saw a nudge upwards as well. The PGMs are weaker on recent negative economic news, however, and gold has widened its premium over platinum. Robust physical buying in Asia continues to provide a floor for gold, which has also been helped by a weaker dollar.
The weaker dollar has also helped European stocks and the common currency, as has recent positive corporate earnings.
In Asia, Chinese CPI was reported at +2.1%, better than the 2.4% forecast. This helped Chinese and Hong Kong stocks, which both showed gains after a week or more of losses. In Japan, the Nikkei closed flat after large recent gains, as the yen’s plummet drew up short of crossing the 100/dollar line. Analysts surmise that banks that are holding yen positions sold the dollar overnight to stop the ten from breaking that barrier until they could drop their yen exposure. This would also be a partial explanation for the weakness in the dollar today.
Commerzbank says that outflows from precious metal ETFs are no longer depressing metal prices to the extent they have done previously. This may be because continued outflows have now been priced in, and as Commerzbank says, physical buyers are taking advantage of the price drop and providing a floor.
However, for gold to turn the recent uptick into a rally, we will need to see more negative news on the U.S. economy. The release of the minutes of last month’s FOMC meeting tomorrow should have a major impact.