Gold is down nearly 1% this morning in New York, at $1,186/oz, as safe haven jitters over Saudi Arabia’s airstrikes in Yemen dissipate, and Fed Chair Janet Yellen’s statements on Friday halt the selloff in the US dollar. The greenback is flirting once again with the 98 level on the DXY index, up 2/3 of a percent against a basket of currencies.
Crude oil is down about a quarter-percent on the COMEX exchange, after gaining nearly 6% for the week after Saudi Arabia intervened in the civil war in Yemen on the side of the faltering government.
Yesterday in the Markets
Wall St. lost a bit more than 2% on the week, as the dollar also faltered from the 100 mark down to 97 on the DXY exchange. Gold was up 1.4% on the week.
Factors Affecting Gold Today
The #1 factor affecting gold today is Yellen’s statement Friday that the Fed was “on track” to raising benchmark rates this year, after keeping them near-zero since the beginning of the financial crisis. This is helping revive swooning stocks (which are also being helped today by a lot of merger talk,) as well as stopping the slide of the dollar.
Personal income and expenditures for February in the US were released this morning, showing a less than expected 0.1% rise in spending after a -0.2% reading in January. This is the fourth straight month that personal spending has fallen below estimates, and after adjusted for inflation to -0.1%, the first drop in personal spending in ten months. Personal income rose 0.4%, but this went towards savings, which rose 0.3% to 5.8%.
That increase in savings may be for a down payment on a house, as pending sales of existing homes were up a surprising 3.1%
Crude oil is seeing a slight correction after a good week, as there has as yet been no terrorist retaliation against Saudi Arabia for its continuing military intervention in its southern neighbor, Yemen. The Yemeni government had been driven from the capital and was on the verge of collapse when Saudi airstrikes hit rebel positions.
The socialist government in Greece is running out of time, as the government coffers run dry, and they are under attack from their supporters (who feel as though they’ve been sold out,) and their creditors (who feel like they’re being jerked around.)
The failure to bring forward any actual proposals for qualifying for additional bailout money from the rest of Europe has seen massive capital outflows from Greece. Some analysts now believe that the projected 1.5% budget surplus (which was to be used to pay existing debt) has now disappeared due to capital flight, and anticipated a budget deficit in Athens, instead.
Ratings company Fitch has dropped the grade of Greek sovereign debt two more levels, to CCC. This is six levels deep into junk bond territory.
Russia is standing by and licking its chops, as it will endure whatever hardship it takes to woo an EU member over into its camp. Having someone who will veto any more EU sanctions against Russia is worth whatever it takes. Putin doesn’t have his eyes just on Greece, however. He’s also buying off EU member Hungary with a $10.8 billion loan.
Parliament in the UK has been dissolved, ahead of May elections. No major party holds a lead in polls, as Euroskeptic and nationalist parties such as the UK Independence Party (UKIP) have drained support from both the Tories and Labour. Since the UK is the second-best performing major economy next to the US, the gains by parties who wish to leave the EU are troubling to businesses. Losing easy, duty-free access to the EU market could plunge the nation into a recession.
The deadline for contentious nuclear disarmament talks between Iran and the West is today. An extra note of tension has been added to the talks, as Iran has been supporting the rebels in Yemen, which Saudi Arabia are presently bombing.
Economic reports for tomorrow include UK GDP, consumer prices in the EU, and consumer confidence and home prices in the US.