Strong China Data Starts Week: Morning Market Update Dec 9

December 9th, 2013 by

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Precious metals started the week in New York slightly above the Friday close. Gold and palladium were mostly retracing Friday’s levels, while silver, and especially platinum, were showing modest gains.

Markets world-wide are watching and wondering if next week’s Federal Reserve Open-Market Committee meeting will continue the party of easy money and bond-buying, or will the coal of tapering be left in Wall St.’s stocking. Traders are waiting with baited breath as two Fed Presidents are scheduled to speak today: Richard Fisher, President of the Dallas Fed, will be speaking on banking trends, then moderating a Q&A session; and James Bullard of the St. Louis Fed, who recently said that Friday’s strong payroll numbers increased the chance for a December taper, will be speaking on monetary policy.

Sunny economic data from China helped lift Asian markets, and to some extent Euro markets as well. The trade surplus for the Middle Kingdom came in near a five-year high, with exports increasing by 12.7% and imports increasing by 5.3%. The Peoples Bank of China set a record-high benchmark for the yuan. amid news that consumer inflation was slowing. A weaker yen helped Japanese stocks, with the Nikkei seeing the best one-day gain in 3 months, up 2.3%.

In Europe, stocks had a choppy day, with the good news out of China counteracted by a surprise decline in German industrial production, and an unsurprising decline in Greek GDP, which came in at -3.0%. Deflation continues to stalk the beleaguered nation, with consumer prices seeing -2.9% – an all-time record, at a time when theĀ  composite euro inflation rate is +0.9.

Fears of Fed tapering also depressed stocks in Europe, but the euro currency hit a six-week high against the dollar and a five-YEAR high versus the yen. The EUR/USD stood at 1.37+ this morning and the British pound was also stronger against the dollar, at 1.63.

U.S stocks opened higher, but traders are focusing on getting the year-end books settled, and keeping a weather eye out for any tapering clues today from Bullard or Fisher. The last big economic hurrah of the year will be next week’s FOMC meeting, and Ben Bernanke’s last press conference as Fed Chairman.

The dollar is weaker, and crude oil prices are firm, each of which helps gold. India is supporting silver prices as government restrictions on gold remain in place. Silver imports rose 40% in October. Lacking any big news on the Fed/tapering front, expect precious metals to exhibit their usual sticky sideways behavior until the Chinese New Year and the U.S. budget fight in late January get closer.

by Steven Cochran

Gainesville Coins Portfolio Tracker and Financial News