draghi

Draghi Rescues Wall St., Dollar

January 21st, 2016 by

ECB President Mario Draghi

ECB President Mario Draghi

This morning’s news is all about “Super Mario” Draghi, the president of the European Central Bank. Even though the ECB left interest rates unchanged at today’s meeting, Draghi later said that they would consider more stimulus at the March meeting. This immediately sent stocks higher, as the US dollar took off like a bottle rocket.

The sharply stronger dollar pushed gold down slightly, which otherwise would have continued steady at yesterday’s spot close just above $1,100 an ounce.

Draghi’s press conference dragged equities in Europe higher, providing at least a temporary reprieve from the nightmare that 2016 has been for stocks. China didn’t have such luck, as the government’s largest market intervention in three years failed to lift stocks. The Shanghai Composite closed down 3.2%.

joblessUS stocks quickly gave back the “Draghi bounce,” when first-time jobless claims were reported to hit a seven-month high. The 293,000 total of newly-fired workers was 10,000 more than the previous week. The Nasdaq was the only index to have a chance of finishing in the black yesterday, but came up short. All indices ended in the red despite a late rally, with the Dow down more than 560 points at one point.

Yesterday’s Commodities Numbers

Gold futures settled at the highest price in almost two weeks, at $1,106.20. This was up $17.10 (1.6%) from Wednesday’s close. Spot gold closed at $1,102.20, up $13.70 an ounce.

Crude futures continued their freefall, with February WTI closing down almost $2 at $26.55. The March contract is now the front-running contract. March WTI closed at $28.35, down $1.22 a barrel. Brent closed down 88 cents (3.1%) at $27.88. Speculators trying to call a bottom in oil are being eviscerated as there seems to be no end in sight for plummeting crude prices.

Today’s Technical Outlook for Gold

Gold is seeing some profit-taking and the effects of a slightly risk-off climate in Europe today. First support should be seen at $1,093, then $1,083. First resistance is $1,105, then $1,109.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product