Gold is moderately higher this morning on safe haven demand. A surging yen has pushed the dollar lower, and first quarter GDP in the US was reported at the lowest level in two years.
The Bank of Japan shocked markets overnight when it refused to expand its enormous QE program, or move interest rates further into the negative. Asian stocks swooned and the yen jumped higher. This sent the US dollar sharply lower. where it continues to drift.
Oil futures are tacking on further gains this morning, attempting another run at 2016 highs. This is another bullish outside factor for gold.
June gold futures settled at $1,250.40 yesterday after a volatile day of trading, a gain of $7. Spot gold closed at $1.245.80, up $2.50. July silver futures settled up 1% at $17.33, the highest close in 11 months.
First support for gold today is $1,248, then $1,239. Resistance is at $1,261, then $1,267.
The Bank of Japan refused to go further down the rabbit hole in its policy meeting today, leaving negative interest rates unchanged, and quantitative easing measures at current levels. This sent the yen skyrocketing against all major peers, and pulled Asian stocks lower.
Wall St yesterday was hit by big losses for Apple, which fell 6.3% after it reported its first quarterly sales drop in 13 years. The Dow and S&P 500 were helped by the Fed’s decision yesterday to not like interest rates, but the Nasdaq could not shake off the effects of Apple’s downturn. The Nasdaq ended 25 points (0.51%) lower.
Traders are breathing a sigh of relief that the Fed did not raise interest rates yesterday, as this morning’s first reading on US GDP for the first quarter came in at the lowest point in two years. Growth in the first three months of 2016 came in at 0.5%, even lower than downbeat expectations of 0.7%. GDP numbers will be revised two more times before being called official. Even though major policy and business decisions are made based on the government’s GDP data, a report at CNBC shows that these numbers have been wildly off the mark in the past.
First time jobless claims for last week rose by 9,000 applicants, for a total of 257,000 people joining the ranks of the unemployed. This is still historically low. First time jobless claims have come in under 300,000 for 15 months, the longest streak since 1973.
In Europe, the German economy went into deflation in April, posting a -0.2% loss from March. The year to year number was slightly better, growing 0.1% compared to March’s 0.3%. However, using ECB metrics, annual inflation was -0.1%. These depressing numbers are despite record high employment in Germany.
WTI oil futures are up again this morning, pushing prices further up into 6-month highs. WTI June futures closed up 1.6% Wednesday, while June Brent futures rose 2%. A close above $45 a barrel for WTI would be a big psychological boost for oil traders.
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