Gold Near One-Month Low Before Yellen Speaks: Morning Market Update July 15

July 15th, 2014 by

gold-rallyGold is near a one-month low as precious metals see small gains from yesterday’s close.

Traders say that a $1.4 billion sell order was dropped onto the market that the COMEX open, which pushed the price down through pre-programmed sell stops and led to the largest one-day drop this year for gold.

The other precious metals also fell, dragged down by the action in gold.

This morning, the dollar is up very slightly in a volatile day for the greenback. Traders are positioning themselves for any comment by Fed Chair Janet Yellen in testimony before the Senate Banking Committee regarding monetary policy. That talk will start at 10am EDT. She will give a second day of testimony tomorrow, before the House Committee on Financial Services.

currencywarEuropean Central Bank president Mario Draghi was mostly unsuccessful in “talking down” the common euro currency yesterday, in testimony before the European Parliament. He said that a strong euro was a danger to the fragile economic recovery in the EU, but refused calls to begin outright quantitative easing in the same manner as the Fed and the Bank of Japan.  Due to the way that the ECB is structured, the Fed, BoJ, and Peoples Bank of China are much better at the “currency wars” game than the ECB could hope to be, so Draghi has incentive to not spark one.

In any case, it’s only been a month since the ECB dropped its benchmark rate to 0.15%, and imposed a 0.10% charge on excess reserves bank have on deposit at the ECB. There has simply not been enough time for those policies to even begin to have an effect on the EU economy yet.

bankThe Portugal bank contagion may be spreading. Shares of Portugal’s largest bank hit an all-time low today, as the  nation’s third-largest bank struggles to cope with its credit being downgraded by both Moodys and Standard & Poors to a deeper level of “junk bond” status.

On Wall St. superbanks JP Morgan and Goldman Sachs both reported surprisingly high earnings, helping U.S. stocks open higher. However, retail sales came in much lower than expected. The 0.2% increase was only one-third of the expected 0.6% increase.

In international news, attempts at brokering ceasefires in Israel and Ukraine have both failed. The Egyptian government tried to arrange a ceasefire between Israel and Hamas terrorists in the Gaza Strip, but more rocket launches by Hamas towards Israeli cities put paid to that.

In Ukraine, the government is accusing Russian forces along it’s eastern border with shooting rockets at Ukrainian forces in an attempt to save the pro-Russian rebels there, including shooting down a Ukrainian transport plane that was flying above the range of hand-held anti-aircraft rockets.

In Iraq, government troops, backed by Shiite militias, have launched an offensive to retake Tikrit, which the extremist Islamic State group has held for a month. If successful, this would be the first setback for the terrorist army that has pronounced the establishment of a government based on medieval Sharia law. In the north of the country, Iraqi Kurdish peshmerga are using tanks to fight off Islamic State attacks on their territory.

There is a raft of economic data coming out of China late tonight, including GDP, retail sales, and industrial production, which will have an effect on markets.

 

by Steven Cochran

Gainesville Coins Portfolio Tracker and Financial News