Gold prices held fairly steady near the $1,290.00 level overnight and within the $1,285-$1,295 mini-range as dollar watchers noted an attempt by the US currency to recapture the 80-mark on the trade-weighted index. More official jawboning was on display overnight and the jaws most tightly clenched appeared to be those of Premier Wen of China.
In effect, the Chinese leader said “Meyiou Banfa” to the clamored-for 20% or 40% appreciation of his country’s currency, saying it would come attached with certain ‘strings’ (like upheaval in the domestic social order, for starters) that he is unwilling to accept.
Over in the Old World, the Eurozone Flash Services Purchasing Managers Index flashed a less-than-comforting figure of 53.6 (down from the 55.9 level recorded in August) as the European version of the US economic recovery slowdown appears to be taking hold on the continent. However, the region climbed out of the trough of recession just a few months after the US did so last June, as reported earlier via the NBER analysis.
For the moment however, given the continuing fragility of said recoveries, the two central banks in question remain ‘on hold’ with the enactment of their exit programs. The Greek (and, to a certain extent, other PIIGS members) credit ‘incidents’ of May have temporarily delayed the ECB’s plan to mop up excess liquidity, while August’s string of economic data prompted the Fed to do likewise and now offer bond purchases in the event that the recovery morphs into contraction.
This morning’s 12,000 filings jump in jobless claims for the latest reporting period certainly would appear to play into the hands of those bettors who see the latter (yet, curiously, continue to load up on silver and noble metals?). As is the (latest) norm, the drop in continuing jobless claims was ignored, as was the fact that –on a historical basis-such claims reliably rise following the Labour Day holiday.
Leading indicators for August were on tap but US stock index futures were already showing a dip following the not-so-hot European data. As well, traders were anticipating that reports regarding existing home sales levels for August –albeit likely to show a gain- will probably end up at their second-lowest level on record. Later this morning, the awaited numbers turned out as follows: August LEI rose 0.3% - a better showing that that recorded in July, but still sluggish enough to maintain anxiety levels more elevated than normal. Home sales gained 7.6% last month but the ‘all-clear’ signal has not been sounded on the real estate front, either.
Precious metals hovered near previous levels and showed minor losses within the first hour of trading as an amalgam of dollar-watching, options expirations, and economic data digestion slowly became the defining pattern of today’s trading. Gold was off only marginally, showing a bid-side quote of $1,291.00 while silver fell 13 cents to the round figure bid at $21.00 an ounce.
Although backing away from the $1,297 area potentially sets gold up for a reversal, only a close under $1,236 would give confirmation of a completed wave 5 – according to EW snapshot analysis last night. Blow-off tops remain a possibility (somewhere near $1,370) but CPM analysts –who also see this cyclical run coming to an end within 12 months’ time – envision more of a ‘rounding tops’ pattern in the cards (with high targets not mentioned).
Platinum dropped $1 to the $1,630.00 mark while palladium sustained a bit heavier selling damage, falling $7 to the $537.00 level. Steady was the operative word in rhodium – it remained parked at the $2,290.00 price marker following small ups/downs in the past twenty-four hours. Crude oil continued to struggle in the wake of further ‘unexpected’ increases in US supplies.
Black gold drew closer to the $74 mark. However, copper climbed to a five-month high as its inventory picture (stockpiles falling for the 31st week in a row) reflected apparently level demand despite the sluggish comeback in certain economies. Over in gold price land, our contact at Heraeus Precious Metals Management in NYC still expects assaults on the thus-far-elusive century mark, since “we are THAT close to it.”
Meanwhile, over in gold industry-land, a couple of noteworthy news items. First, yet another ‘sign-of-the-times’ headline (this one from this week’s Denver jamboree of diggers) proclaims that “Soaring Gold Prices Stoke Gold Executives’ Bullish Outlook.” Kinda like the research study that offered the stunning revelation that “Clothing manufacturers recommend using…clothing to keep warm.”
Next up, the finding by ABC News that three sales reps at Glenn “Arguing With Idiots” Beck’s favorite gold-selling firm were previously taken to court by the SEC on “allegations that they used deceptive mass mailings and what are sometimes called "boiler room" tactics to defraud 115 mostly elderly investors out of $1,180,000 over 13 months, according to court records.”
No argument there, Beck, as today marks the start of Congressional hearings into the controversial sales practices of precious metals dealers who pioneered the practice of weaving sales pitches into radio and TV broadcasts of right-wing conservative political personalities such as yours, Laura Ingraham’s, Mike Huckabee’s and Fred Thompson’s.
Meanwhile, remained tuned to the next live performance by the Fabulous Funds - $1,300 is the name of that tune, they say.
Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America