Spot gold eased slightly overnight from Friday’s close of $1,202 an ounce. as large traders and speculators attempt to move the market ahead of options expiry today at 1:30pm ET. Morning spot silver in New York is basically unchanged, platinum is down a half-percent, and palladium up a half-percent.
An unexpected increase in the German Ifo business confidence survey helped boost the euro, which brought the dollar down below Friday’s close after hitting an early four-year high.
Global stocks are up on the afterglow of China’s surprise interest rate cut, helped by the Ifo survey. The Chinese central bank expressed a willingness today to make further cuts if necessary, to reverse an almost three-year decline in wholesale prices. Falling revenues have been causing a surge in corporate loan defaults. An increase in market liquidity could spark higher physical gold sales in China.
Yesterday in the Markets
Friday saw Wall St. notch a fifth straight week of gains. Markets opened higher, but drifted lower throughout the day before stabilizing in late afternoon. The dollar got a boost from ECB president Mario Draghi’s remarks on reversing disinflationary pressures as fast as possible, which depressed the euro. Treasuries were well-bid Friday, with the yield on the 10-year note dropping 3 basis points to 2.31%.
Spot gold popped over $1,200/oz shortly before the COMEX open Friday, holding until noon, when profit taking dropped the price to near $1,195. It regained its footing in afternoon trade to close up $7.60 to $1,202.10. Silver once again followed gold’s lead throughout the day, while platinum built a steady, modest gain throughout the day, closing up $18 to $1,222. Palladium was Friday’s best performer, posting a 2.87% gain on the day to close at $789.
Friday’s closing numbers:
Economic News Affecting Gold
The Markit flash Services PMI for November disappointed this morning, coming in at 56.3 from a previous reading of 57.3. Analysts had expected a slight boost to 57.8. The Chicago Fed National Activity Index for October which was released today was a big fail. September’s reading had been revised down from .47 to .29, but analysts predicted a big rise to .50 for October. That was not to be, as it fell to an anemic .14. The three-month moving average fell to a -.01.
Business activity in the Lone Star State did better, as the Dallas Fed Manufacturing Index showed business activity steady at 10.5 A slowdown to 9.0 had been expected. The picture is not so rosy for manufacturing, which fell from 13.7 to 6.0.
Geopolitical News Affecting Gold
Stalled talks between Western powers, Russia and Iran over Iran’s nuclear program were due to end today, but have been extended for seven more months. Iran insists on keeping some ability to enrich uranium, which its regional neighbors Saudi Arabia and Israel vehemently disagree with.
New York Federal Reserve President and former Goldman Sachs chief economist William Dudley found himself unable to sway a Senate panel that everything was fine regarding his agency’s oversight of Goldman Sachs. With a history of a revolving door for employees between the “too big to fail” bank and the New York Fed, and the release of Fed investigator Carmen Segarra’s tapes showing Fed supervisors pressuring investigators to drop probes of Goldman, Congress is closer than ever to passing legislation to force the Fed to clean up its act. Politicians on the right and left may unite to strengthen laws to reverse the “regulatory capture” (infiltration of an agency by the entities it is supposed to regulate) that many see Goldman Sachs exercising over the NY Fed.
If successful, this could mean actual prosecutions against bankers for market manipulation, instead of the “pay and fine and not admit guilt” practice now in effect. Beltway insiders say that there is little chance of any such law passing, however.
Markets this week will be dominated by Wall St. closing all day Thursday for the Thanksgiving holiday, as well as only trading a half-day on Friday. OPEC meets on Thursday in an attempt to get everyone on the same page in order to reverse the bear market in crude oil prices.
Tomorrow’s economic reports include German GDP, which has the chance to move European markets; U.S GDP, which could move global markets; and U.S. retail sales, housing prices, and consumer confidence.