Weaker than expected wholesale price reports out of Europe and the U.S. have stocks on both sides of the Atlantic on the back foot this morning, continuing the shaky trading of the last few days.
Gold held steady overnight, but saw some minor consolidation at the New York open to pull the price under the $1,210 mark. Silver continues steady this morning from Wednesday’s close.
Crude oil is up over 1% in New York, as ISIS advances in Libya, Syria, and Iraq make headlines. The dollar lost ground in late trading in Europe, as ECB meeting minutes showed the central bank happy with early results from their quantitative easing program, and saw deflation risks abating.
Yesterday in the Markets
Gold managed to hold its own against a modestly stronger dollar yesterday, gaining $2 an ounce to close at $1,209.80 (close enough to $1,210 that it doesn’t matter.) Silver was flat, closing at $17.08, while the PGMs ticked upwards slightly. Gold holding the floor above the $1,208 mark against a dollar rally is a good short-term sign. The greenback closed above 95.5 yesterday, gaining a third of a percent.
Crude prices were up around $1 a barrel, as petroleum stockpiles fell twice as fast as expected. First quarter GDP in Japan was recorded at +2.4%, raising expectations of future oil demand.
Stocks had trouble keeping their heads above water ahead of the release of the FOMC minutes. Prices jump immediately afterwards, but, in a replay of Tuesday’s market, suddenly gave up al gains in the last hour of trading. The Nasdaq was the only one of the three major indices to post a gain, and that was only 0.03%. The Dow and S&P 500 closed just under unchanged.
Factors Affecting Gold Today
The Middle East is in the news today, with headlines on ISIS capturing cities in Iraq, Syria, and Libya dominating. The Salafist terror group has conquered the ancient Syrian city of Palmyra, whose historic ancient ruins the jihadists have sworn to destroy. (This is only partially true. In order to raise money, they video the large buildings being destroyed, then sell the smaller antiquities on the black market after the videos increase demand for surviving relics.)
ISIS-affiliated groups have also seized control of Mummar Ghaddafi’s home town in Libya, a symbolic victory over secular Muslims. The taking of the Iraqi city of Ramadi gives ISIS a major logistics victory.
In related news, a cargo ship from Iran loaded with what Tehran claims is humanitarian aid and doctors has agreed to stop in Djibouti, at the western entrance to the Red Sea, to allow the UN to inspect the cargo. The ship, escorted by two gunboats of the Iranian Navy, is sailing to a rebel-controlled Red Sea port in western Yemen, and Iran has rejected Saudi demands that their blockading ship be allowed to inspect the vessel.
The looming economic collapse in Greece is still dominating markets in Europe, and today’s softer-than-expected wholesale price reports aren’t helping stocks on the Continent. The socialist government of Greece demanded another €1.1 billion in emergency relief from the ECB for the nation’s beleagured banking sector, but were only granted €200 million to offset depositor runs on banks across the country.
First-time jobless claims in the U.S. rose more than expected last week, jumping 10,000 applications to 274,000. Analysts expected a total of 269,000. The four-week rolling average of claims is still near a 15-year low, though, helping the stock market. The Flash PMI report came in lower than expected, dropping to 53.8 from 54.2, when experts had predicted a slight increase to 54.6.
Existing home sales also gave markets an unwelcome surprise, dropping 3.3%. The unexpected drop was blamed on high home prices, constricted supplies of homes on the market, and stagnating wages reducing Americans’ ability to save for a home. This pretty much dovetails into the news that the Consumer Comfort Index dropped by the most since October 2013.
A day after many “Too Big To Fail” banks paid billions in fines for manipulating currencies and interest rates, rumors are surfacing of price rigging in the crude oil sector. These giant banks have proven once again that they are “too big to jail,” as, even though Citigroup and JP Morgan both pled guilty to felony criminal charges, the SEC refuses to sanction them, letting them carry on business as usual.
We’re looking at an early close in U.S. markets tomorrow, ahead of the Memorial Day holidays. Fed Chairman Janet Yellen is scheduled to speak at 1pm about the nation’s economic outlook, in Providence, Rhode Island.
We’ll also get consumer prices in the U.S., and GDP numbers from Germany.