Gold and silver saw significant rallies in Asia on bargain hunting ahead of the Chinese New Year on the 31st. Reports from Asia indicated that supply chain slowdowns due to the Christmas and New Years holidays contributed to slight physical gold shortages in some markets. Prices moderated somewhat in Euro trading, but regained ground early in New York. Gold and silver continue to gain, even in the face of a rising dollar, which is bearish for precious metals.
At 10am Eastern, gold is up nearly 1.5%, and silver is up 3%. Platinum is up a little over 1% while palladium has gained almost 2% after a spike in early New York trading.
The dollar was flat in Asia, but rose in Euro trading. The greenback rose against the euro and pound, and was marginally lower against the yen and yuan. Even with today’s action, the dollar is still near recent highs against the yen. The yield on the 10-year Treasury hit 3.03%, and the yields on German bonds were also higher.
In the U.S., stocks opened sharply lower after record closes to end 2013, even as the Markit manufacturing PMI showed a slight increase to 55.0 from 54.7. First-time jobless claims for last week dropped 2,000 to 339,000 new applications being filed. Analysts had expected a rise of 1,000 to 342,000. The four-week rolling average was up 8,500 to 357.250. Many analysts are poo-pooing the numbers, saying that the difficulty in seasonally adjusting claims during the Christmas season makes any numbers suspect. The ISM factory index dropped to 57.0 from 57.3, which was still better than expectations.
Euro stocks were also lower, off their 5-1/2 year highs, despite good manufacturing numbers for the EU. The German Markit PMI was 54.3 from 52.7 in November, the 6th straight month of expansion, and the highest since June 2011. Italy’s PMI was also reported as better than expected.
An article by the deputy director of the Peoples Bank of China, Yi Gang, covered China’s plans to open up their currency market while restricting speculative short-term foreign cash inflows. The HSBC Chinese PMI for December came in at 50.5 against November’s 50.8, due to the first reduction in exports since August. The official PMI, which covers more large, state-run companies, was 51.0 for December, from the previous month’s 51.4
The buzz this morning in the business media is about stock markets being over-bought in the major indices, with even NPR airing a segment flatly warning about the stock market bubble in the US.