Precious metals traded in a tight range overnight, with gold staying in a tight band just under $1200. The PGMs are close to yesterday’s New York open, slightly above yesterday’s close. The dollar is up slightly, as is oil. More voices are starting to wonder if the post-taper gold selloff hasn’t been overdone, taking into account all-in costs of mining. They also note that the gold ETFs will run out of gold soon if outflows continue at current rates, which will restrict supplies going forward. Gold ETF outflows have equaled 25% of global gold production this year.
A huge revision of third quarter GDP in the U.S. sent stocks sharply higher out of the gate this morning. Q3 growth was revised upward from 3.6% to 4.1%, due mostly to consumer spending on gas and healthcare. Consumer spending was revised to 2% from 1.4%, and the estimate of business software purchases was more than tripled to 5.8% from 1.7%.
Standard & Poor’s downgraded European Union debt from AAA to AA+, while keeping the UK at AAA. The euro declined slightly, but stocks didn’t seem to care, and edged into the green for the best weekly closing in eight months.
The money market rate in China hit six-month highs, as the government tries once again to squeeze big banks out of the under-the-table “shadow banking” sector that has grown to worrisome levels. Hong Kong and mainland stocks reacted negatively to the squeeze in money supply.
In Japan, consumer inflation hit a five-year high, giving signs that the Abe government’s desperate quantitative easing policy may finally be pulling Japan out of its extended deflationary spiral. However, some analysts caution that the growth in consumer spending may be purchases that are being brought forward ahead of the hike in the national sales tax. That tax is scheduled to increase from 5% to 8% this spring.