Both gold and silver opened moderately lower this morning while equities were on the rise across Asia, Europe, and the Americas. We’re seeing a small correction in oil today after yesterday’s strong rally, as both WTI and Brent crude were about 1% lower. The dollar has moved back to about 97.5 on the DXY index as the euro and the euro and yen both weakened overnight. This was the first sign of the strength for the dollar in about a week, but the precious metals remained rather robust, although spot platinum lagged behind again.
Yesterday in the Markets
Stocks made a somewhat surprising recovery on Monday, tracking higher along with the precious metals, which finally reacted to Friday’s nonfarm payroll news. 10-year Treasury yields slid a bit, settling down near 1.90%.
Factors Affecting Gold Today
The firmer dollar this morning had a hand in pulling gold back from a 7-week high. The yellow metal has still outperformed the S&P 500 year-to-date, but only by a small margin.
European markets opened solidly in the green all across the continent on a softer euro. The PMI data for the eurozone as a whole came in at an 11-month high. Similarly, services PMI for the U.K. hit a 7-month high. As Europe awakened from its four-day weekend, the big news was that FedEx acquired the Dutch logistics company, TNT, for a total of $4.8 billion. This places a large stake of the company squarely in Europe, which will likely prove to be an encouraging sign to other companies in the region. Meantime, Spain became yet another European nation with negative bond yields, as its 6-month bill has now crossed into sub-zero yields for the first time ever.
Asian markets were also significantly higher, partly on the positive buzz created by the AIIB, which has attracted as many as 40 of the world’s most developed nations as charter members of the new infrastructure investment bank. One of those members will likely be Australia, although the country has seen the AUD slide nearly into parity with the NZD, colloquially known as the kiwi. Though the Reserve Bank of Australia (RBA) was expected to again cut its benchmark interest rate again, yesterday’s policy meeting revealed that the central bank is standing pat for now with its rate at an all-time low of 2.25%–still some 200 basis points above the Federal Reserve’s key rate. There was, however, an odd spike for the Aussie dollar overnight that is now being investigated by regulators.
In other news, junior Kentucky Senator Rand Paul announced his candidacy for the presidential election in 2016 this morning. He will be run in the Republican primary, and is branding himself as a challenger to the establishment G.O.P.
The EIA Petroleum status report will be released in the U.S. tomorrow, along with the minutes from last month’s FOMC meeting. Switzerland announces its CPI while factory orders data come out in Germany, and merchandise trade numbers come out in France.