The precious metals were steady at this morning’s open after gold and silver posted their best weekly performance since January last week. Stocks opened flat after similarly advancing last week amid global economic uncertainty and the Fed meeting. Silver was quickly about 10 cents (0.60%) higher this morning, moving back toward $17/oz after trading below $16/oz for much of last week. Gold looked to move higher again, sitting steady at $1,185/oz.
Yesterday in the Markets
Friday saw equities jump back up, with the DJIA breaking 18,000 again and the Nasdaq surging past 5,000. This put stocks up for the week despite some rough patches and uncertainty with the Fed. The precious metals also rose across the board, pushing gold into positive territory for the week, its best since January. 10-year Treasuries saw demand, with yields settling near 1.95%.
Factors Affecting Gold Today
Continued meetings between Greek leaders and the EU are attempting to sort out the speedy implementation of economic reforms that Greek Prime Minister Alexis Tsipras promised the country’s European creditors he would fast-track. The negotiations are imperative for Greece to receive its next loan disbursement from its lenders; otherwise, the government could quite literally run out of funds for normal operations, pensioners, and the rest of the state payroll by early April. European shares were down on the worries about Greece, though London’s FTSE 100 was essentially flat.
The U.S. dollar is still falling to begin this week, slipping to just a hair above 97.0 on the DXY dollar index this morning. The weakness for the greenback is an expected bit of correction and profit-taking after its massive bull market rally over the last 6 months or so. If the dollar is indeed in a super-cycle, so to speak, it stands to reason that it will move back up at some point this summer. Despite the slip for the USD, crude oil still sits at a 6-year low on the record oil output from Saudi Arabia. WTI crude fell 0.60% this morning to about $46.25/bbl and Brent crude was about 0,33% lower at $55.15/bbl.
After Janet Yellen and the Fed indicated last week that the central bank would ultimately hold off on raising rates in the immediate future, the gold bulls came back out in earnest. Following last week’s 3% rally, gold will be setting its sights on another strong showing to push it back above the $1,200 mark.
With nobody now expecting interest rates in the U.S. to rise before September or October, the precious metals may have more room to run in the interim. There is a bit of a paradox at play, though; if the Fed is careful and gradual about how it raises rates, so as not to send consumer prices to the moon when it tightens monetary policy, then the need for gold as a risk hedge becomes less important. However, in the lead-up before the Fed proves it will use such a policy, the metals will see some safe haven demand amid the uncertainty.
In other news, the Russian central bank has been busy giving out loans to cash-strapped branch banks in the country. Russian banks are becoming increasingly dependent on support and funds from the central bank, especially since the economy has gone to shambles amid economic sanctions and a general economic slowdown in the surrounding region of Eurasia.
Flash Composite PMI will be released all around Europe tomorrow, for France, Germany, and the eurozone as a whole. Both CPI and PPI come out in Great Britain. (Nearly a case of TMI, eh economic authorities?) It’s also a busy day in the States, with CPI, Flash Manufacturing PMI, the Richmond Fed Manufacturing index, the FHFA House Price index, and new home sales all being reported.