The platinum group metals are rallying strongly in early New York trading, with platinum up $20 to break the $1,500 barrier, and palladium up $10 to break the $850 level.
Gold popped to $1,344.90 on the Hong Kong open last night before retreating slightly, breaching the $1,331 resistance level that also marked the 61.8% Fibonacci retracement of the $1,338 – $1,240 line. If gold can manage a solid close above $1,331, it could open up the next leg upward for the metal. However, light volumes ahead of the July 4th holiday on Friday may weaken that signal.
Silver continues to motor along steadily above the $21 mark. while the dollar wallows at the lowest levels since mid-May. So much for safe haven demand for the greenback, despite the breakdown of a cease-fire in Ukraine, and the army of the most powerful terrorist group in the world fighting to conquer Iraq.
Economic news overseas helped markets, as China’s official PMI for June grew slightly to 51.0, compared to last month’s 50.8. European Union aggregate PMI shrank modestly to 51.8, down from 52.2, but analysts were expecting that.
Bank stocks helped the EU markets off to a good start, and Wall St. opened higher on good feelings over the sign that China may be recovering. Tokyo stocks hit a one-week high, but concerns over local government loan defaults and “phantom copper” used at loan collateral in China offset the good domestic PMI report.
Increasing manufacturing in China is going to mean more demand for palladium and platinum, as the government moves forward in its plan of pulling old, Marxist-era vehicles off the road to cut down on literally deadly smog levels.
Since Friday is a holiday in the U.S. (don’t forget to put your flag out!), the important non-farm payrolls report will be released on Thursday. The European Central Bank will also be holding their first policy meeting since implementing a “negative interest rate” policy on excess funds held by the big banks at the ECB. On top of that, many traders will probably only be working a half day on Thursday. Let’s hope people with guns in Ukraine, Syria, or Iraq don’t decide to do something Thursday or Friday, with markets experiencing such light volume.
Adding to the unease in southern Europe, Bulgaria’s large banks have been subjected to what officials are calling an “orchestrated assault‘ by criminal figures, who are spreading rumors about their being insolvent. This is causing bank runs on three of the nation’s largest banks. The Bulgarian central bank has had to take over one bank that is heavily used by government agencies, and offer emergency liquidity to others. The funny part about this is, Bulgarian banks are generally more healthy than those of surrounding nations.