Gold has recovered all the lost territory due to the surprise nuke deal between Iran and the major powers, and is nudging its trading range back up to the $1,240-$1,250 level. Much of this recovery is due to two things: China, and China.
On the one hand, China's "bully play" over the Senkaku Islands in the East China Sea have ramped up tensions, as the U.S. calls Beijing's bluff. America isn't ready to roll over and cede Southeast Asia to China just yet, and is robustly backing Japan's claims to the islands. (A 1972 treaty between the two nations gave the islands back to Japan after the U.S. seized them in WWII.) The recent saber-rattling over the islands has caused light safe haven action in gold.
On the other hand, China's massive gold imports are also supporting gold. Gold imports into China through Hong Kong hit a 7-month high in October. This does not count the growing percentage of Chinese imports now coming through Shanghai. While some of this gold may be for the Peoples Bank of China's gold reserves, most of it is being ravenously snapped up by China's burgeoning middle class. Chow Tai Fook, the #1 jewelry store in China (and largest in the world) reported a 92% increase in net profits in the six months spanning April to September.
Chinese and Hong Kong stocks rose on gains in brokerages and railway companies. The Hang Seng closed at a 10-month high. Chinese rail companies got a boost as Beijing revealed plans to help connect Serbia and Hungary by rail. This will give Chinese rail companies a good foothold in eastern Europe for their equipment.
In Europe, the good news keeps growing for Germany. After a much stronger than expected Ifo business sentiment report on Tuesday, German consumer confidence was clocked at the highest level in 6 years. This is on the heels today of news that Angela Merkel has formed a coalition government after recent elections, ensuring stability in the economic engine of the EU.
The euro rose on the news, hitting a four-year high against the yen, and rising past the 1.36 mark once again versus the dollar.
There's a lot of economic data to be released in the US today, which may have outsized influence on markets experiencing thin volumes ahead of the Thanksgiving holidays. Some traders may opt to work from home, as a huge winter storm ravages the East Coast.
Durable goods orders declined 2% after a 4.1% increase last month. The decline was blamed on the government shutdown and sequestration causing a reduction in military orders. First-time jobless claims dropped 10,000 from last week, with 316,000 new applications for unemployment benefits. Analysts had expected a 4,000 increase.
Consumer sentiment was the big report this morning, rising from 73.2 last month to a big 75.1, mostly on the outlook from wealthier consumers. This helped the dollar back into positive territory. Still ahead are the MBA mortgage application report and leading economic indicators.
Have a safe and happy Thanksgiving and Hanukkah! Tomorrow is the last time Hanukkah and Thanksgiving will fall on the same day for over 70,000 years.
Gainesville Coins showroom and trading floor will be closed Thursday for the holiday, but as always, you can order through our website 24/7.