Jobless Numbers Break Dollar Rally, Gold Retests Lows: Market Update Sept 11

September 11th, 2014 by

First time jobless claims in the U.S. unexpectedly rose to a two-month high. 11,000 more people filed initial claims for unemployment last week than in the previous week, for a total of 315,000 people shown the door. This snapped the dollar rally, and also sent U.S. and European stocks lower.

The Nikkei closed at an 8-month high, as the weak yen helped exporters, but a decline in Shanghai stocks pulled the Hang Seng in Hong Kong down to a one-month low.

Gold and silver both broke down through support lines and June lows, and are declining despite the weaker dollar. Gold is down .75% and silver is down 1.5% in midday trading.

The PGMs are also solidly lower, with platinum down .5% and palladium down 1.5%.

Yesterday in the Markets

oil leakSpot gold closed down $6.80 in New York yesterday, while silver lost 12 cents. Both platinum and palladium lost $6. Wall St. closed positive for the first time in three days, with Apple and Twitter pulling the NASDAQ up. Lower oil prices pulled many energy stocks down yesterday, with West Texas Intermediate dropping to 8-month lows, and Brent crude hitting a 14-month low. OPEC yesterday cut sales forecasts for 2015, putting more pressure on crude futures. European stocks closed slightly down due to worries of Scottish secession.

Economic News Affecting Gold

As mentioned above, first-time jobless claims were much higher than expected, which depressed not only U.S. stocks, but EU stocks as well. The dollar also halted its rally on the news. but that was no help for gold.

Chinese CPI came in at 2.0% for August, down from 2.3% in July and lower than the expected 2.2%. This leads traders to believe the Chinese Central Bank will have more room to enact stimulus measures, instead of needing to fight inflation.

Geopolitical News Affecting Gold

Scotland-voteBritish and European stocks got a breather this morning upon the news of a new poll showing that 53% of Scots surveyed were against leaving the UK, with 47% in favor. The news also gave the pound a reprieve.  A second poll tallied 48% “No”, 42% “Yes”, and a big 10% “undecided.”

The markets are giving more warnings over the move to Scottish independence, with Scotland’s two largest banks saying that they will move their headquarters to London if Scotland breaks from the UK. Lloyds Banking Group and the Royal Bank of Scotland both warn that they will leave, in order to minimize the disruptions to their global operations.

In other news, both British Petroleum (BP) and Royal Dutch Shell warn Scottish independence leaders that they are over-estimating the amount of North Sea oil reserves, and that Scotland will not have nearly the amount of oil revenues that the pro-independence leaders are telling voters.

droneObama announced that he was authorizing airstrikes against the terrorist quasi-nation of The Islamic State in territory held by them in both Iraq and Syria. He asked Congress for $500 million to arm and train “moderate” rebels fighting against the Syrian government, which brought up questions of how could it be insured that the Islamic State wouldn’t defeat the rebels and take those weapons for themselves.

Looking Ahead

Friday brings us Italian CPI, EU industrial production, and retail sales, consumer sentiment, and business inventories in the U.S.


by Steven Cochran

Gainesville Coins Portfolio Tracker and Financial News