Gold eased overnight, back towards the lower level of the tight range it has traveled for the last month. Silver recovered to unchanged, after being hit with a sudden dip in the middle of European trading.
Platinum saw moderate buying at the European open, and is trading modestly higher. Palladium is holding firm near three-month highs.
Watch platinum and palladium prices, as the militant South African mineworkers union AMCU and the major platinum producers are in the middle of non-binding court mediation. AMCU operatives have assaulted and killed members of rival unions to enforce a platinum strike that has now lasted four months.
The dollar is up modestly, riding increasing Treasury yields ahead of the release of the April FOMC minutes. Every word will be run through a microscope by traders, looking for dissent or discussion that could give clues about future Fed policy. The Euro is below 1.37 against the dollar, while the yen is slightly off 3-1/2 month highs. Physical confrontations in the South China Sea between China and Vietnam, and riots in Vietnam that have burned Chinese businesses and killed Chinese citizens, is providing a safe haven demand for the yen.
Speaking of China, a deal to purchase Russian natural gas was announced today, a day later than expected. A person close to the deal said that negotiations carried on until 4am local time. Russian President Vladimir Putin had flown to Beijing for the deal, which so far has been curiously light on details.
China is negotiating from a position of strength, as Russia needs to sell their natural gas far more than China needs to buy it — a position underscored by Iranian President Rouhani’s presence in Beijing, invited there by China for talks of forming a security alliance between Iran, Russia, and China. The message the Chinese were giving Putin was, “you’re no more important to us than Iran.”
If the European Union reduces natural gas imports from Russia, the Russian economy could plunge into recession, and China apparently used this fact to negotiate a hard price (a price that both sides refuse to reveal.) China is also pre-paying between $20 billion and $25 billion, so that Russia can build a natural gas pipeline from Siberia to the Chinese border. By not revealing the price, China is allowing Putin to save face.
Wall St. opened higher, after an unhappy day yesterday. A stronger dollar and falling bond prices are helping sentiment.