Gold prices gave up slight gains this morning after being trampled by a sudden sharp rally in the dollar. Most of the attention was on the ECB this morning, however. European Central Bank president Mario Draghi announced an extension of the bank’s bond buying scheme past the March 2017 deadline, and promised additional stimulus if needed.
Spot gold is trading just above the $1,170 mark, down about $2.00. Spot silver earlier lost its grip on $17.00, trading just under that level. The markets have yet to react to the news this morning that chat logs turned over to the courts by Deutsche Bank appear to reveal a broader conspiracy by big banks to rig gold and silver prices.
The precious metal exchange-traded funds (ETFs) are continuing their steep slide this morning, falling between 0.25% and 0.5% into the red. Over the course of November, the gold ETF sector saw net outflows of nearly $4.7 billion. This was the worst monthly performance for these funds since March 2013. It’s also a clear indicator that the “hot money” has rushed out of the gold trade as speculators turn instead to stocks.
Stocks are having a volatile session this morning, a day after posting the best daily gain since Trump won the election. The Dow Jones hit a new record for the third day in a row, bringing the remarkable total to 18 new all-time record closes in the last 22 trading sessions.
Of course, the big news this morning was the European Central Bank’s decision to extend its €80 billion money-printing and bond-buying program of quantitative easing past its end-date in March 2017. The central bank will continue its purchases through December of next year, but will cut its monthly total by a quarter to €60 billion. Although European equities initially balked at this reduction not being sufficiently dovish, Draghi reiterated in his press conference that the ECB would essentially do whatever it takes to support the eurozone economy.
The next major economic news that could move markets will be the Federal Reserve Open Market Committee (FOMC) decision about whether or not to raise interest rates next week. Most are convinced that target rate will increase a quarter-percent (25 basis points) to 0.50%-0.75%.
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