Gold and silver are near yesterday’s close, with silver rising back about the $20 mark. Platinum is near steady, while palladium is consolidating after hitting a 2-1/2 year high in European trading yesterday.
The association of the world’s top industrialized nations is once again known as the Group of Seven, after expelling Russia from the Group of Eight. The Western powers are still keeping a wary eye on the Russian Bear, but have refrained from other than symbolic sanctions against certain individuals.
The dollar has managed to claw its way up past 80 on the DXY dollar index, while the euro gave up early gains on a drop in German business confidence. The yen and yuan are slightly weaker. In other currency news, Venezuela effectively devalued its currency 88% yesterday, by opening an exchange that sold bolivars at the open market rate. The government said that this was implemented to combat the black market in dollars, which has been trading near this rate.
Wall St. opened in the green after a not-so-good day yesterday, boosted by home sales reports, and Philadelphia Fed president Charles Plosser talking back Yellen’s “six months” interest rate gaffe. Plosser, who is a voting member of the FOMC this year, said he sees short-term rates not hitting 4% until the end of 2016.
Both the Case-Schiller and FHFA home price indexes showed a small seasonally-adjusted increase in January, compared to December. The Case-Schiller number was actually -0.1%, non-adjusted, but +0.8% adjusted. This was the third non-adjusted drop in a row. Year over year home prices for January rose 13.2%.
Speaking of January housing numbers, the Commerce Department revised new home sales for the first month of the year down to 455,000, from a previous 468,000. February new home sales hit a five-month low in February, dropping 3.3% to a seasonally adjusted 440,000. This is the lowest level since last September. Year over year new home sales dropped 1.1%. The serial blizzards were partially to blame, delaying construction of new homes, which reduced supply. (Besides, who wants to move to another house in a blizzard?)
In Europe, stocks and bonds both gained after an ECB policymaker said that the bank could start Fed-style bond purchases on the open market as a quantitative easing measure. Markets pared gains when the German Ifo business confidence index was reported to have dropped to 110.7 from 111.3 in February, over worries about how badly sanctions against Russia would hurt the German economy. March’s number was still above expectations of 108.
Watch for volatility tomorrow, as options expire in the paper market. Unless sanctions are suddenly increased against Russia, or Putin makes the mistake of thinking that he can now take eastern Ukraine, precious metals should settle down, and we can see if the pre-Ukraine uptrend will reassert itself. Also watch for the Chinese central bank to start quantitative easing measures. This will have a larger upward impact on gold than Ukraine will.