After holding at $1,120/oz in overnight trading, the gold price appeared to be on the move higher when markets opened in New York. However, this upward trend was snuffed out around 9 am ET, when the gold price fell sharply, losing about $12 per ounce (1% lower) to trade below $1,114/oz.
Silver tumbled 2%, giving back about 30¢ per ounce to settle at $14.30/oz. Platinum and palladium were 0.9% and 0.4% lower, respectively.
Really, today’s action in the gold market has more to do with the difference between “paper gold” on the COMEX and actual spot prices. COMEX gold futures stop trading at 2 pm ET, so this measure didn’t react to the dovish FOMC announcement yesterday. (Spot gold, which trades until after 5 pm ET, jumped following the news.) So, this morning the spot price was pulled back in line with the futures market by speculators, as gold’s surge over the past week naturally leads to some profit-taking.
There was a mix of good and bad news reported about the U.S. economy in the wake of yesterday’s FOMC meeting. Jobless claims were reported at 278,000 for last week, yet another weekly total below the key marker of 300,000 claims. This was 16,000 less than the previous week, which was a 6-month high. The up-and-down of this measure in the first month of the year is being attributed to adjustments after the seasonal holiday hiring. This is seen as less of a long-term trend for the labor market and more of “white noise.”
On the other end, durable goods orders fell by 5.1% in December, the biggest drop in 10 months. The continued slump in crude oil prices is directly connected to companies spending less money on equipment. (“Durable goods” are any equipment or capital intended to last at least three years—the “big stuff.”) The purchase of these long-term goods and supplies are also being held down by weaker overseas profits due to the appreciation of the U.S. dollar. The fall in durable goods orders comes after outlays on equipment surged 9.9% during Q3 2015.
The dovish Fed announcement on Wednesday mixed with the beginning of first-quarter corporate earnings season helped lift all three U.S. stock indices into the green this morning. However, their European counterparts traded slightly lower, for the most part, thanks to concerns about the eurozone’s fragile banking system. One example is an agreement between the EU and battered Italian banks to resolve all of the bad debt these institutions are holding. The U.K. economy did look to be on the rebound, however, as growth in the services industry helped lift GDP by 0.5% in the fourth quarter.
Meanwhile, emerging markets advanced on the expectation that the Federal Reserve will maintain its dovish outlook and is unlikely to raise rates at its March meeting. Poland, South Africa, and Turkey all saw their benchmark stock indices rally 1% or better. Yet, Shanghai fell almost 3% overnight, adding to cumulative losses of 9.6% so far this week. Crude oil recovered from its recent losing streak, as WTI crude has gained 6.4% over the last two trading days. Gold’s losses snapped a three-day streak of gains.
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