Precious metals were up across the board overnight, with gold hitting a three-week high, silver posting a two-month high, and the PGMs all performing strongly. The ride was derailed this morning in New York, as first-time jobless numbers came in stronger than expected. This invigorated the languishing dollar, sent the yield on 10-year Treasuries to two-year highs, and panicked stock markets around the globe.
It’s a case of “good news is bad news”, as the much better than expected jobless numbers, coupled with a CPI climbing 0.2%, spooked traders with the possibility the dreaded Fed Taper would bring Halloween nightmares a month early to equities. First-time jobless claims dropped a whopping 15,000 to a seasonally-adjusted 320,000 – the lowest level since October 2007.
Wall St. took the deepest dive since late June at the opening bell, where it wasn’t helped by Wal-Mart cutting profit and revenue forecasts. Tech stocks were wounded by Cisco announcing 4,000 layoffs amid weak earnings.
Euro stocks were down 0.8% after strong gains yesterday, drug down by drugmakers after AstraZeneca and GlaxoSmithKline were both downgraded by Morgan Stanley. The Fed tapering fears only added to the pressure.
In Asia, the Nikkei dropped 2.1% after hitting a one-week high Wednesday, due to squashed expectations of a corporate tax cut, and again, worries over the U.S. Fed. Hong Kong stocks were flat, while Chinese stocks were down 0.8%.
Some supporting data for gold is the report that the world’s largest gold ETF, the SPDR, had the second inflow of gold in a week, raising its holdings by 0.23% yesterday. Also, the World Gold Council estimates that both India and China will break the 1,000 tonne level on gold imports this year, despite global demand being down 12% in the second quarter ending June, caused by outflows from ETFs during the April and June price drops.
Silver is still rocking the casbah, being affected much less than gold is by negative news. Silver, platinum and palladium are all solidly above their 50-day moving averages.
At noon, New York spot prices for all four precious metals were up from yesterday’s close. The dollar index DXY has retreated from its jobless claims-fueled spike, and is down 0.12% to 81.6050 .