Gold closed down 1% yesterday as the dollar continues a strong rally and the S&P 500 edged up 5 points to set a new record. Most of these “new records” on the stock market have been on gains of under 10 points, and often under 5 points.
Overnight, gold almost exactly retraced the previous day’s movement in Europe overnight, but saw a smaller dip than yesterday at the COMEX open, to trade slightly higher this morning in New York. Platinum also tightly retraced the previous day’s market action in Europe.
Silver gained overnight, to ease slightly in New York to trade nearly unchanged. Palladium is slightly higher after recent selling pressure.
The markets had all eyes on Jackson Hole, Wyoming this morning, waiting for speeches by the two most powerful central bankers in the world: Mario Draghi of the ECB, and Janet Yellen of the Fed. Russia decided to throw a curveball at the markets though, and unilaterally sent nearly 40 trucks of humanitarian aid across the Ukrainian border without permission, and without Red Cross support.
Moscow says that the trucks are headed to the rebel-held city of Luhansk, where there is heavy fighting. The rebels are losing ground to the Ukrainian Army, and pro-Ukrainian analysts wonder if Russia’s move is an attempt to give the rebels a breather, even if the trucks do not have military aid. The Ukrainian government has pledged not to attack the aid convoy, even though it calls Russia’s unilateral move an “invasion.”
The International Red Cross refused to escort the aid convoy, citing concerns over the safety of its workers. Reporters on the scene noted that several of the trucks are only partially loaded, and items could be heard moving and rattling around as the trucks drove over rough ground. This raises questions as to Moscow’s plans. Are the truck there to boost the numbers and make the convoy look more impressive, or is there another goal? The convoy is using rebel-controlled back roads to avoid the main highway from the border to Luhansk, to avoid running into Ukrainian army patrols.
Russia’s action stopped a two-week long rally in European stocks in its tracks, and led to safe haven demand for the yen and Swiss franc. The euro is once again below 1.33 to the dollar, while the dollar is porpoising over and under unchanged, near 82.1 on the DXY after a very strong week. Wall St. dropped immediately upon the open. In Asia, the Nikkei ended a 9-day rally on profit-taking, while Shanghai and Hong Kong stocks were up moderately on actions of the mainland government to increase liquidity in the markets.
The big news is the 10am speech by Janet Yellen at the global central banker conference in Jackson Hole. Watch for news out of this speech to override anything short of nuclear war today. Economic news to watch for on Monday is the Ifo Business Climate survey out of Germany, and U.S. new home sales.