A stronger dollar and a reversal of last week’s crude oil rally has precious metals moderately lower in New York this morning. Asian shares gave up gains overnight as the latest stimulus measures by the Chinese central bank were negated by new trading rules designed to reign in Asian irrational exuberance.
European stocks are up this morning, despite a growing consensus that the leftist government in Greece will be unable to bring a plan to the table for replacing existing bailout terms, that will be acceptable to its creditors. Wall St is recovering from a very nasty Friday on the backs of upbeat earnings reports this morning.
Yesterday in the Markets
Stocks were down across the globe on Friday, and losses on Wall St accelerated. Crude oil capped the biggest weekly rally since 2009, while gold was up modestly.
Factors Affecting Gold Today
The dollar rose above unchanged in Europe this morning, putting pressure on commodities. Crude is seeing moderate profit taking after last week’s excellent rally, while gold is back under $1,200 an ounce. News that Saudi Arabia is still producing oil at record levels is contributing to the pressure on crude futures.
Greece still have not provided any concrete plans for amending the nation’s bailout terms, as capital flight continues to drain banks throughout the country. More and more analysts are putting the odds of Greek dropping out of the EU at 40% or higher. This is unwelcome news to those holding Greek-issued debt, as a sovereign default means they will never see the billions of euros of money lent to Athens be repaid. This is going to lead to a lot of anger in various parliaments throughout the Continent, as voters hold their politicians responsible for squandered taxpayer money.
Tomorrow is the festival of Akshiva Tritiya in India, the Golden Day of Eternal Success. Naturally, this is a major holiday for buying gold, and Indian gold merchants are forecasting 25% higher gold sales this year, helped by lower gold prices. Across the Arabian Sea in Qatar, gold merchants are expecting sales to double.
Tomorrow we get the results from the ZEW economic outlook survey in Germany; and the Redbook chain store sales in the U.S.