Precious metals are lower this morning, as stock market performance and economic reports take the edge off any safe haven sentiment. Paper contracts amounting to 300,000 oz of gold were sold in two minutes this morning in New York, edging the price under $1,300 and setting off some pre-placed automatic sell orders. Gold hit a four-week low of $1,293. Silver moved downward at the same time in sympathy. The PGMs are seeing some profit-taking this morning. Prices at 10am were gold at $1,293, silver at $20.67, platinum at $1,463 and palladium at $865.
Yesterday’s closing spot prices were gold at $1,304, silver at $20.91, platinum at $1,477, and palladium at $869.
As mentioned yesterday, expect some “nudging” of the gold price by the big players ahead of the options expiry Monday morning. With volume so light lately, a large buy or sell order can have a greater than usual effect on the spot price, but long-term trends will follow fundamentals.
The HSBC flash PMI for China came in this morning at 52.0, up from 50.7 in June. This is the highest reading in 18 months. Some say it is evidence that Beijing’s strategy of “targeted stimulus,” instead of blanket money-printing, is working. The EU got a bit of good news as well, with Markit composite PMI coming in at a three-month high of 54.0, compared to June’s 52.8. This number is led of course by the economic powerhouse of Germany, but even the weak southern European nations are starting to sputter back to life. The anchor dragging the EU economy right now is France. Poor performance in the service sector of the EU’s second-largest economy is holding the numbers back.
In the U.S., the big economic news is first-time jobless claims. Last week, the fewest number of people in over eight years were shown the door. 19,000 fewer people lost their jobs, for a total of 284,000 newly-unemployed. Experts were actually expecting an increase of 5,000 instead of a drop.
This helped the dollar pop to a one-month high before settling down to unchanged. The greenback is still above 80.8 on the DXY index, holding on to recent gains.
U.S. new home sales in June dropped 8.1%, and the sales numbers for March, April and May were all revised downwards. Existing home sales in June were up 2.6%. New home sales have been fueled by big hedge funds coming into the market and paying cash for new homes, and then renting them out. That market has cooled, as the big funds and REITs slow down or halt acquisitions.
U.S. flash PMI for July came in at a healthy 56.3, but that was down one full point from June’s stellar numbers. It’s still good enough to help nudge the Fed into “raise rates” mode, but even if they do raise the overnight lending rate before the end of the year, they will still be behind the curve on inflation.
MarketWatch notes that we’re presently in the third-largest stock bubble in history, and wonders what it going to be the pin-prick that pops it, and when?
Keep in mind that precious metals and most everything else will be volatile until after Monday’s options expiry. Also keep in mind that stories that talk about gold demand being lower comparing numbers to last year, which was the greatest physical gold demand in decades. Refiners and mints were running three shifts, seven days a week, and couldn’t keep up with demand. So don’t let some of the stock-oriented press fool you with a “numbers game.” In weight, first quarter 2014 demand was the same as first quarter 2013.