Gold Rebounds Despite Dollar: Morning Market Update April 10

April 10th, 2015 by

Gold is rebounding this morning, gaining more than $15 an ounce after yesterday’s dip below $1200. Silver is up nearly 3%, while the PGMs are also showing solid gains.

Wall St is very volatile this morning, opening up slightly and immediately dropping, only to pull back up into positive territory.  The dollar was flat in Asia overnight, but caught a pre-dawn rally to open in New York over the 99 mark on the DXY index. Despite this strength, gold is proving stronger as buying on yesterday’s dip is leading to positive momentum

Yesterday in the Markets

Precious metals closed down yesterday, as concerns over a summer interest rate hike by the Fed and blockbuster merger and acquisition news fueled action in European and Asian stock markets. The Stoxx Europe 600 closed at an all-time high Thursday on upbeat economic data from Germany, and news that Greece successfully made a €460 million debt payment due the IMF. It now has six business days to provide details on its still amorphous plans for economic reforms, in order to unlock another dose of bailout money from the ECB, EU, and IMF.

balance of gold and dollarWall St. spent the morning hours in the red, barely inching into the green in early afternoon trading. Stocks got a moderate lift in the last half hour of trading from energy stocks, which in turn were boosted by gains in oil. At 4pm, Brent crude was up 2%, while West Texas Intermediate was up only slightly.

The US dollar was up 1% against a basket of currencies, and hit a 3-week high against the euro. The weaker euro, combined with “money printing” from the European Central Bank, is helping ease deflationary pressures in the EU.

Factors Affecting Gold Today

Today, Iran’s supreme ayatollah may have destroyed the chance of having sanctions lifted against his nation, in return for scaling back Iran’s nuclear research program. He lashed out at the major powers involved in the negotiations, saying “The other side is stubborn, difficult to deal with, breaks promises, and is a backstabber.”

Also in the Middle East, the parliament of Pakistan voted not to join Saudi Arabia’s coalition fighting Yemeni rebels.

European stocks are gaining again today, while the Nikkei saw a modest correction after hitting a 15-year high yesterday. Wall St. is whipsawing between slightly positive and slightly negative, despite more merger & acquisition news from Blackstone, and an announcement that GE is shedding most of its lending business and real estate, using the money for a $50 billion stock buyback.

The dollar is near-unchanged, holding on to slight gains to stay above the 99 mark on the DXY. some analysts are now predicting that the euro will drop below the dollar in value, and concerns over ECB quantitative easing is leading central banks to divest euros from their foreign currency reserves. This may end up threatening the euro’s status as an international reserve currency.



looking-aheadLooking Ahead

This weekend, China will announce its merchandise trade balance, Japan will report on producer prices and the Bank of Japan will release a policy statement.

In the “no surprise at all” department, Hillary Clinton will finally announce Sunday that she is running for President.

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