Gold prices are twitching between marginal gains and losses as traders digest an “insufficiently dovish” European Central Bank policy meeting, and a drop in first-time jobless claims in the US.
Gold had broken above the $1,350 level before first-time jobless claims were released at 8:30am in New York. The small decline in the numbers of the newly-fired caused gold to blip lower, but it quickly recovered just in time for the ECB’s policy statement. This had more of an effect on gold prices, but fresh buying has helped it recover.
At 10 am in New York, gold is trading at $1,344.10 an ounce. Spot gold is down a miniscule 90 cents, while December gold futures are $5.10 lower. Silver is trading at $19.72 an ounce. Spot silver is down a paltry three cents, while December silver futures 13 cents. Through Wednesday’s close, gold had gained 3.5%, and silver was 8% higher. Profit taking emerged after gold hit a three-week high yesterday.
Wall St opened lower this morning, on news that Mario Draghi refused to increase the stimulus dosage for European markets. Stocks closed nearly flat, but mixed, on Wednesday. The Nasdaq barely made it into positive territory, ending 8 points higher for a new record close. The Dow and S&P 500 were marginally down.
Financial markets in Europe had already priced in more stimulus from the European Central Bank, but ECB president Mario Draghi announced this morning that the central bank was staying the course for now. His statement that he did not see an extension of the bank’s bond buying scheme (aka money printing) led EU stocks and bonds both lower, and strengthened the euro.
First-time jobless claims in the US last week fell by 4,000 applications, with 259,000 people newly-unemployed. Economists surveyed by Reuters had expected a 2,000 person gain. The news is not expected to be a factor in the Fed’s decision to raise interest rates or not when it meets on the 21st.
The dollar has given back all of yesterday’s minor gains this morning, as the yen goes from strength to strength. Bank of America Merrill Lynch forex experts yesterday forecast that the dollar will see one more breakdown before the Fed raises rates again.
Both Brent and Nymex (West Texas Intermediate) oil futures are trading 1% higher this morning, after both settled 1.5% higher yesterday. The American Petroleum Institute’s US crude stockpile report showed an unbelievable draw of 12.1 million barrels last week. Analysts expected a 425,000 barrel increase in supplies. The shutdown of nearly every offshore oil rig in the Gulf of Mexico ahead of Hurricane Hermine is thought to be the main cause of such a large drop in supplies.
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