Gold rebounded after Monday’s moderate losses, as short-covering, bargain hunting, and a little safe haven trade over Greece gives the yellow metal legs against a weaker euro and rising stocks.
Crude is trading near unchanged after Saudi Arabia announced no intentions to reduce its record monthly output, but the escalating civil war in Yemen increases concerns over attacks on oil tankers in the Red Sea.
Merger talks and good earnings reports are boosting global stocks this morning.
Yesterday in the Markets
Precious metals fell as stock markets rallied on better than expected earnings reports and merger talks.
Factors Affecting Gold Today
Rallying stocks and a stronger dollar are hitting precious metals, as the euro drops after the national government in Greece orders local governments to send all cash to Athens. A growing likelihood that the Greek government will default on its sovereign debt, forcing central banks and the EU to write off billions of euros of bonds, is depressing German economic sentiment.
A day after a Chinese real estate developer defaulted on dollar-denominated bonds, the first state-owned business in China has defaulted. This is seen as just the tip of the iceberg, and more defaults by private and government-run companies is expected as the Communist government stops supporting failing companies. This should increase the attractiveness of gold for the average Chinese investor.
Tonight gives us the merchandise trade report in Japan; mortgage applications, home prices, and existing home sales in the U.S. as well as crude oil stockpiles; and consumer confidence numbers from the EU.
First quarter earnings reports continue, which of course will be a major market mover.