Gold broke through the $1,260 resistance level in New York this morning, on short-covering and a lower dollar, after climbing moderately overnight on good news out of Europe. Silver got a huge boost in Europe, and is also seeing further strength in early U.S. trading, trading solidly over $20. Platinum is slightly higher as labor strikes in South Africa begin. These walkouts affect 70% of South African platinum production, though mines are speculated to have at least a few weeks of above-ground stocks set aside to ride out the strike. Palladium is slightly lower this morning.
Other industry news this morning besides the South African platinum mine strikes is reports that two of Russia’s largest gold miners will be cutting production by a combined 150,000 oz. Petropavlovsk said that production would be down 16% from 2013 levels, as it sold off high-cost alluvial operations, and Nord Gold reported declining ore grades in its major operation in Burkino Faso. Both companies are focusing on cost-cutting measures. Russia’s largest gold producer, Polyus Gold, is suspending plans to open a major new mine until 2015.
On the currency front, the dollar is seeing major weakness against the euro and pound, as well as being lower against the yen. The euro saw its largest jump in three months on news that the EU composite PMI for January surged to 53.2 from 52.1 in December. This is the best reading in two and a half years.
This news offset troubling news from China, where the Markit/HSBC flash PMI dropped below the reading signifying expansion. The 49.6 reading is down from the 50.5 in December, and is the lowest in six months. This put pressure on base metals and raw commodities, as China is the world’s largest buyer of commodities.
Stocks opened moderately lower in the U.S., and promptly headed downward. The news from China, as well as poor earnings from McDonald’s and Lockheed put the market in a funk.
First-time jobless claims in the U.S. were essentially flat last week, increasing by 1,000 for a total of 326,000 people losing their jobs. The four-week rolling average of first-time unemployment claims dropped by 3,750 to 331.500, the lowest in six weeks.