The stock markets opened deep in the red despite the lowest weekly jobless claims in 15 years. Though Wall St didn’t initially respond well to signs of a firming labor market, with all three U.S. indices falling by about 1%, the markets recovered back near unchanged once the jobless data sank in. Crude oil was higher in both Texas and the North Sea after WTI crude hit 6-year lows below $45/bbl yesterday; meanwhile, the dollar remained strong around 94.4 on the DXY spot index after easing back the past two days. This dragged down precious metals from their recent steady ride; gold and silver were each sharply lower, falling to $1,270/oz and $17.50/oz around 9:30 am EST this morning, respectively. Platinum was hit the hardest, dropping almost $25 to widen its gap with the gold price some 2%.
Update, noon EST: Each of the precious metals tumbled even further in today’s trading, with gold off over $25 at $1,255/oz; silver down over 6% (-$1.10), back below $17/oz; platinum $40 lower at $1,220/oz; and palladium sinking over $20 lower to below $780/oz.
Yesterday in the Markets
The relatively dovish tea leaves of yesterday’s FOMC meeting initially caused stocks to rise, but undulated throughout the day. With money rapidly flying out of equities this week, Treasuries rose yet again, with 10-year yields dropping below 1.75%. The precious metals slightly consolidated after their recent run-up, losing some of their bullish momentum. Stocks fared even worse on several U.S. companies cutting projections due to the relative strength of the dollar; this was in spite of Apple, Inc. posting the best earnings that anyone can remember.
Factors Affecting Gold Today
The combination of the antagonism between Greece and Western Europe, the tensions between Russia and Ukraine, along with the increasingly apparent global economic slowdown, has yet to send precious metals shooting to the moon as some analysts have predicted. Nonetheless, these drivers remain in place for the near-term. In spite of the Fed’s seemingly dovish stance–and, as usual, the central bank’s governing board was more ambiguous than anything else, and the markets predictably seized upon tepidly dovish signals–the current pullback in precious metals could very well be a good buying opportunity before the next rally.
Japan’s Nikkei 225 was down 1% on weak earnings projections from major firms Nokia and Samsung. With the slight rise in oil prices, European shares tracked very modestly lower with Asia. London’s FTSE 100 led the dip at -0.45%.
McDonald’s shares were slightly higher after announcing their current CEO will not be returning. The company’s stock has remained largely flat over the last 3 years that have been marked by falling revenues and distribution problems in its Asian and Russian franchises. Meanwhile, in Germany, the litigation-embattled Deutsche Bank surprisingly reported Q4 profits after analysts expected a net loss of almost €300 million. This pushed the megabank’s shares up nearly 5% early this morning.
Tomorrow sees 4Q GDP reported, as well as the release of the important Chicago PMI reading, the consumer sentiment gauge, and the employment cost index (ECI), a broad measure of labor costs, which have been growing at a more sluggish pace lately.