Precious metals are seeing profit taking and chart consolidation in New York, after gold hit a two-month high overnight, building on a great week. Silver saw it’s best weekly performance since September 2008 last week, rising 13%. Hedge funds are reported increasing their longs on gold, while the SPDR gold ETF added 0.4% to holdings last week.
Treasury yields hit their highest point in two years overnight, as the dollar struggled in choppy trading. The dollar is very slightly higher vs the yen, while losing ground to the euro.
The Dow and S&P 500 are flat after a really bad week last week, while the NASDAQ is up slightly.
In Europe, the Bundesbank announced that accommodative monetary policy by the ECB does not preclude hikes in the benchmark rate, strengthening the euro to a two-week high vs the yen. Euro stocks saw some profit taking, especially Italian stocks, which dropped 2% after seeing 14% gains recently. The party of Berlusconi is causing jitters over a collapse of the coalition government in Italy, if their leader is removed from the Senate over his conviction for tax fraud.
In Asia, the Nikkei was up .79% on oil stocks, while Hong Kong stocks were down for the 3rd session. Chinese stocks were still hung over after Friday’s “fat finger trade” debacle.
Major short-term factors for gold will be rising unrest in Egypt, where two dozen policemen were kidnapped and executed in the Sinai; and more mundanely, the minutes of the August FOMC meeting are scheduled to be released on Wednesday. Generally, markets all over the world are seeing very light volumes, as traders hesitate to take positions ahead of the Fed’s September meeting.