Gold Holds At New Support After Selloff: Morning Market Update Sept 3

September 3rd, 2014 by

Gold is holding at new support above the $1,265 mark, essentially unchanged from Tuesday’s close. Silver and platinum are also near yesterday’s close, while palladium continues to ease on conflicting rumors of a ceasefire between Russia and Ukraine in the open warfare in eastern Ukraine.

While September is traditionally a good month for gold, the levels though June to August have been elevated due to the Ukrainian and Gaza crises. These are easing faster than the seasonal fundamentals are growing. Of course, it’s just the 3rd day of September, so it’s still early.

Crude oil is up over a dollar, regaining half of yesterday’s loss, while the 10-year T-note is slightly lower, with the yield up 2 basis points to 2.44%. German 10-year bunds are steady, with the yield at 0.93%.

Stocks are up in the U.S. and Europe, with even the Russian Micex gaining on ceasefire rumors.

Yesterday in the Markets

Precious metals sold off on Tuesday, as many traders returned from summer vacation and began rebalancing books. Spot gold lost $21, while platinum and palladium were down $18 and $23 respectively. Wall St closed mixed, with the Dow and S&P 500 in the red, and the Nasdaq up. The dollar lost a slight bit of ground to drop under 83 on the DXY, where it held steady for most of the day Tuesday.

Economic News Affecting Gold

Chrysler, Ford, and Nissan all reported stronger than expected auto sales for August, while GM lost a bit more than expected. Sales were boosted, analysts say, by the larger number of zero interest loans available.

U.S. factory orders jumped 10.5%, fueled mostly by an usually large number of aircraft orders for Boeing.

tiny dollarBloomberg has a story on how companies are engaging in stealth inflation by reducing the amount of food in packages, but still charging the same price (or even raising prices.)  As shown in these charts at ShadowStats, the government keeps changing the way it measures inflation, to make the numbers stay low. Compare the present inflation numbers to the way the government would have reported the same conditions in 1990 and 1980, to get a real historical feel for the present levels of inflation.

Geopolitical News Affecting Gold

Preliminary steps toward a ceasefire in Ukraine have been announced, even though fighting continues between the Ukrainian Army on one side, and pro-Russian rebels and regular Russian Army units on the other. The Ukrainian government was on the cusp of taking the last two major cities in eastern Ukraine under rebel control, when Russian armor and artillery crossed the border to rescue the rebels. The Russian Army, using more modern equipment than that available to Ukraine, has pushed the Ukrainians back and forced Kiev to the negotiating table.

At the NATO summit in Wales, Obama called on Europe to step up and fund their own defense, instead of sitting back and making the U.S. spend the money to defend them. He also called on a more focused and coherent response to the terrorist quasi-nation of The Islamic State, after the public beheading of another American prisoner.

Looking Ahead

looking-aheadMajor news tomorrow includes the meeting of the European Central Bank and the Bank of England. The Wall St Journal notes that, although markets are certain that the ECB will announce Fed-style quantitative easing, there are a few things that stand in the way. Not the least is the fact that the ECB instituted negative interest rate policy and other measures just this June, and they haven’t had time to affect the market yet.

We’re expecting lots of big economic news in the U.S. tomorrow. We have first-time jobless claims and the ADP private sector payroll reports, international trade numbers, Productivity and costs, and the ISM non-manufacturing purchase managers index.

by Steven Cochran

Gainesville Coins Portfolio Tracker and Financial News