Precious metals prices were pointing higher this morning after rising across the board in overnight trading. Gold remained firm at $1,215/oz after touching a two-week high around $1,220, and silver is at $16.70/oz. Some profit taking pared the gains. Both of the PGMs also moved higher, with platinum recovering to $1,190/oz after its recent slide and palladium strong at $825/oz. This modest bump for the metals comes even as the dollar is robust, registering at about 95.15 on the DXY after easing up a bit this morning. Precious metals are also being lifted by the paper markets, where gold and silver ETF holdings are at yearly highs.
Yesterday in the Markets
Friday saw stocks pull back slightly while the metals pared their losses for the week by each ending in the green.
Factors Affecting Gold Today
Asian shares are up after the People’s Bank of China again loosened its monetary policy, cutting interest rates by 25 basis points. Stock indices in the region were in the green this morning despite a drop in capital spending in Japan. The rate cut is seen by some as bullish for gold buying in Asia, especially in light of China’s plans for a yuan-denominated gold fix later this year to compete with the “new” gold fix in the West. Though the yen is still not fully convertible into gold, the idea has gained momentum due to the continued investigations into big Western banks for their role in precious metal price manipulation.
Personal spending for January dropped in the U.S., thanks in large part to cheaper gasoline prices. This left stocks mixed this morning, but the S&P 500 slightly lower but its two counterparts a quarter percent into the green. By 10 am EST, all three indices were up. A slew of economic data coming out of Europe will play a large role in possibly moving European shares back above their 7-year high: although consumer prices for the EU broadly saw decline, manufacturing growth in the U.K. picked up to its fastest pace since July. Stocks in Europe were lower in early trading.
India has not yet lifted its 10% import duty on gold in an effort to shrink its trade deficit, as the world’s most populous democracy continues to compete with China as the world’s #1 demander of gold. In order to derive some value from the prodigious amount of private gold purchases in the country, the Indian government may introduce its own gold coin. The proposed coin would feature the Ashoka Chakra, which also appears on India’s national flag. A gold bullion coin would perhaps allow gold to be recycled within the country rather than only imported. In other news, India’s finance ministry and its central bank have agreed to set inflation targets of 4% for the first time.
In the Middle East, Turkish gold exports surged in February. This is leading to speculation that Turkey is continuing to provide gold to Iran in exchange for gas and oil as a way to circumvent Iran’s economic sanctions.
Motor vehicle sales numbers come out tomorrow. Janet Yellen will also be speaking in New York about banking regulation.