Gold is lower this morning after a 2% gain Monday, back to the same levels yesterday as it was before the worst U.S. manufacturing numbers since June 2009 caused a $24 spike in prices. There was some profit taking as a strengthening dollar is back above 100 yen, lending some pressure to precious metals.
In Asia, Japan’s Nikkei index rebounded from a horrible day Monday, clocking a 2% rebound today. Chinese stocks were lower as China’s central bank pulled over $2 billion of liquidity out of the economy today. Hong Kong stocks were slightly lower, registering the 5th straight day of losses on low volume.
In response to record gold imports in April and May, the Indian government has extended gold import restrictions in an effort to curb a huge current accounts deficit. India is the world’s largest gold importer.
In Europe, stocks gained as the euro remained above 1.30 versus the dollar. Traders there are being cautious ahead of the European Central Bank policy meeting on Thursday.
In the U.S., the trade deficit is reported to have increased 8.5%, about in line with expectations. April U.S. home sales were reported to have risen 12.1% over the same time last year, the largest increase since before the housing crash. This is adding to concerns that the real estate bubble is being re-inflated by the government’s purchases of $40 billion a month in mortgage-backed securities, in addition to its purchase of $45 billion a month in Treasuries.