Gold jumped above $1,188/oz overnight before falling back to near unchanged this morning. Silver was similarly flat at $16.75/oz. Shares in Europe were lower on the 6th consecutive month of negative inflation readings for the euro area, deepening concerns about the risk of deflation on the Continent. Following yesterday’s rally, Wall Street looks for a bit a pullback today, although barring an unforeseen sell-off, stocks are set to post their 9th straight quarter in positive territory as 1Q 2015 wraps up.
Yesterday in the Markets
The precious metals fell precipitously, as gold touched a one-week low of $1,185/oz, more than $13 lower, while silver lost about 1.65% to close around $16.70/oz. Palladium and platinum each lost more than 1%. Meantime the stock markets were up all day, opening higher before putting on cruise control. Each U.S. index ended more than 1% higher. The dollar firmed up, gaining 0.7% to close just below 98.0 on the DXY index. Crude oil fell slightly
Factors Affecting Gold Today
The euro fell to just $1.07 this morning, a two-week low. This did not help boost equities, which were about 1% in the red across the board this morning. This has been a banner quarter for European indices nonetheless, which several countries seeing 20% growth thus far in the year alone.
The German economy has been carrying the day for Europe, with the country seeing unemployment drop to an all-time low amid continued austerity in spending. The bag is decidedly mixed around Europe, however: joblessness has spiked to nearly 13% in Italy, and core inflation numbers are still running at or below zero for the region as a whole. All the same, European equities have performed better during the first quarter of this year than any other quarterly period since 1998.
Crude oil prices are falling quickly this morning, with Brent and WTI crude both 1.9% in the red around 10 am ET. A potential agreement between Iran and a group of Western nations is helping place downward pressure on oil prices as an end to the decade-long standoff between Iran and the West could mean an opening up of an entirely new supply of the crude to an industry already long in oversupply. Although the six countries involved in the negotiations haven’t reached any conclusive deal, the rumors are that a tentative agreement is in place and the final touches will be completed in the next three months.
Although Asian shares have performed spectacularly to begin the year, with both Chinese and Japanese stocks leading the way, the region may take a hit if the stimulus measures taken by the Bank of Japan don’t begin to take hold. As inflation remains dismally low (but the equities market continues to climb), the central bank may have to consider more quantitative easing: the catch is that the BoJ now holds 25% of the Japanese government’s debt, and the bank is running out of bonds to buy! In addition, Japan has showed hesitance in joining the AIIB, missing today’s deadline to become a charter member of the investment bank. Meanwhile, both Taiwan and Norway have signed on to be part of the growing 40-nation enterprise.
Switzerland, France, Great Britain and Germany will all release PMI numbers tomorrow, as will the EU as a whole. Wednesday is busy in the U.S., as PMI, ISM, the ADP payrolls report, and the EIA petroleum status report will all be announced.