Gold is down sharply at noon in New York, after a five-day rally saw a 3.5-month high hit yesterday. A modest decline this morning due to account-squaring, profit taking, and a technical correction was run over by a skyrocketing dollar, causing a plunge in precious metals.
Second quarter growth in GDP for the U.S. was revised upward sharply, to a 2.5% annual rate from an initial 1.7%. Combine this with a decline in first-time jobless claims, and that was all the fuel the dollar needed to reverse its recent fortunes. The DXY dollar index hit a four-week high in morning trading.
As threats of immediate military strikes against Syria fade, safe haven jitters have abated. Demand for yen and Swiss francs, as well as gold have eased, adding to the dollar’s strength today.
Oil futures are also off yesterday’s highs as an escalation of the Syrian conflict doesn’t seem imminent at this time.
The better than expected economic news in the U.S. today has the market back to thinking that the Federal Reserve will announce a reduction in its $85 billion a month bond buying program at its September meeting.
This should be the last two days of the usual thin summer volumes in the market, as most European traders will be back from holiday next week. Expect very thin volumes today and tomorrow, as U.S. traders head out for an early start to their Labor Day weekend.