Gold inched higher this morning after falling below $1,155/oz yesterday, possibly a corrective bounce from the past two week’s decline to yearly lows for the yellow metal. All of the precious metals opened slightly higher in New York: silver added almost 1% back to $15.60/oz, while platinum and palladium gained $4 apiece in early trading. Mixed economic data in the U.S. had stocks hesitant but pointing higher, while the dollar eased about 0.6% on the DXY, but remained above 99.1.
Yesterday in the Markets
The stock markets saw one of their worst days of 2015 in the U.S., erasing all of their gains so far this year. The Dow Jones Industrials plunged more than 300 points, or about 1.8%. The precious metals continued their slide, all closing marginally in the red. Treasuries saw some demand, and yields on the 10-year note fell back to 2.05%.
Factors Affecting Gold Today
A slew of data was released in the States this morning. U.S. retail sales surprisingly fell for a third straight month, in part due to less shopping in the cold weather in the northeast. Oil inventories rose for a 9th straight week, adding to the supply glut and keeping inflation around the globe capped. Crude prices are down to about $48.50/bbl for WTI and $58.50/bbl for Brent, with a $10 spread. Meantime, jobless claims actually fell more than expected, giving some lift to equities.
The Federal Reserves stress tests for the country’s 31 biggest banks revealed that some of the country’s largest financial institutions came dangerously close to not “passing” the evaluations, even when the headline data showed that the banks were apparently healthy. In fact, several banks (JPMorgan, Goldman Sachs, Morgan Stanley) only received approval after resubmitting amended capital plans; Bank of America got only conditional approval for its plans; and the U.S. divisions of Deutsche Bank and Banco Santander both had their capital plans rejected.
In other central banking news, South Korea’s central bank, the Bank of Korea, has cut its benchmark interest rate by 25 basis points to join the monetary easing club. Even as one of the strongest economies in the region, South Korea is not immune to the deflationary pressures that have been gripping both Europe and Asia–especially now that China, Japan, and the eurozone have all implemented some form of quantitative easing policies. Asian shares rose sharply this morning on the BoK news, with the Shanghai and Nikkei 225 indices up 1.75% and 1.5%, respectively. This marked a 15-year high for the Nikkei.
For an update on the standoff between Russia and Europe in Ukraine, Ukraine has been approved for a $17.5 billion loan from the IMF. European shares were mixed this morning as the ECB continues to buy Italian and German sovereign debt as part of its stimulus plan.
Italian CPI is released on Friday after many countries released their CPI data on Thursday. The U.S. consumer sentiment survey and PPI for final demand will both be announced.