Precious metals rallied in early New York trading as stocks opened lower and the dollar plunged. Gold is back above $1,240, silver above $20, and platinum is testing the $1,425 mark. Palladium is just below yesterday’s close in volatile trading this morning after profit-taking on the huge midday boost it saw yesterday.
U.S. stocks are down as poor earnings and first-time jobless claims that saw 2000 fewer new applications for unemployment benefits give an excuse for profit-taking. The Consumer Price Index for December rose the fastest in six months, up 0.3%. Core CPI, which excludes food and fuel, was up 0.1%, held low by a record drop in the costs of prescription drugs and other medical supplies.
The dollar, which had barely regained positive territory this morning, plunged on the jobless claims and inflation numbers. The greenback is lower against the euro, pound, and yen, and slightly up versus the yuan.
In Europe, car sales recovered to hit a four-year high, as bond sales in the troubled periphery nations of south Europe improved. Euro stocks were within shouting distance of a 5-1/2 year high, boosted by increased production by mining companies such as Rio Tinto.
The increased production should be a warning sign rather than a cause for joy, as it means Rio Tinto and other precious metals miners are “high grading” – mining only the best veins in order to increase the amount of gold retrieved per ton of ore. This can reduce the useful life of a mine, as it becomes unprofitable to operate when only low grade ore remains, even if prices rise. The miners are doing this in an effort to keep their heads above water until gold prices improve.
In Asia, the Nikkei was down on profit taking, and waiting on this morning’s economic reports out of the U.S. The Hang Seng was boosted by news of investment by tech companies, while Shanghai was essentially flat. Emerging markets are still being hammered, with the Turkish lira hitting another all-time low due to political unrest, and capital outflows continuing in India and Indonesia.