Gold Retrenches As Asian Stocks Plummet: Morning Market Update Feb 4

February 4th, 2014 by

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Gold held steady in Asia overnight after weak manufacturing data led to a big boost in the yellow metal on Monday, but has consolidated as stock markets in Europe and America recover from the worst one-day drops in over six months.

Silver and palladium are flat, while platinum is down. The dollar is slightly stronger versus the euro, while the yen softened on receding safe haven demand. That same easing of safe haven demand has led bonds and gold lower in morning trading.

Wall St. opened higher, buoyed by strong earnings reports the day after the S&P 500 suffered its largest one-day drop since last June. China’s markets are still closed for the Lunar New Year celebrations, but the Nikkei plunged 4.2% to add to Monday’s losses, while the Hang Seng dropped 2.9% to bring it down to the worst level in over a year. European stocks started lower, weighed down by Asia’s troubles, but trimmed losses on good earnings reports out of the U.S.

Platinum’s price decline today seems to go counter to the woes the industry is experiencing in South Africa. Amcu, the largest trade union in the platinum mines, continues its strike, with the union demanding that entry-level wages more than double. They are also demanding wage increases across the board. The platinum mines affected account for 70% of global platinum production.

Mining companies awoke to another headache, as NUMSA, the largest union in the platinum smelter and refinery space, announced a strike.  According to the Bureau of Mines, an industry trade group, 40% of South African platinum mines are either marginal, or already losing money. Acquiescing to union demands would destroy the industry, which has seen expenses double since 2009, and electrical blackouts from the antiquated national utility company.

Big economic news today will be durable goods orders in the U.S., but the number everyone’s waiting on is Friday’s non-farm payroll reports. Analysts warn that the S&P 500 is near a major support line that, if breached, could lead to a larger sell-off.

by Steven Cochran

Gainesville Coins Portfolio Tracker and Financial News