Consumer prices in April were reported slightly down from March, but core CPI, which ignores energy and food costs, increased by 0.3% from last month, the largest one-month gain in two years.
This sent the dollar popping up out of negative territory, with the idea that core consumer inflation, reported at an annualized 1.8% rate, could put a rate hike by the Fed back on the table.
The sudden gain in the dollar reversed a mild rally in gold in New York, which is denominated in dollars.
Yesterday in the Markets
Stocks saw muted action yesterday, with the difference that, unlike the previous couple of days, the last-minute sell-off came too late to send any of the major indices into negative territory at the close. Traders note that there has been no guidance in the stock market lately, and the Dow and S&P 500 have inched to new records mostly because of stock buybacks by major companies, not market demand.
Oil saw a healthy rally on Thursday, with WTI seeing its best one-day gain in a month, up 3% to regain the $60 mark, and Brent crude up 2.3% to over $66.50.
The dollar never saw positive territory yesterday, but losses were contained as it finished just under unchanged. European bonds were flat, while the 10-year T-note improved slightly, with the yield dropping 6 basis points.
Gold eased by $3 on on Thursday, to close at $1206.80 to keep the $1205 floor intact. Spot silver was up five cents to $17.13, platinum was flat, and palladium gained $4 to close at $779
Factors Affecting Gold Today
U.S. markets will be seeing light volumes today, as many on Wall St. decided to make the long Memorial Day weekend a four-day affair. The big news today regarding consumer prices may therefore have an outsized affect on prices today.
Things are happening in Southeast Asia, as the U.S. finally wakes up to Chinese aggression in the South China Sea. Beijing has been using dozens of dredging barges at several reefs in the disputed waters, dumping sand on top of the coral to build artificial islands, complete with aircraft runways and radar installations, in order to take by force fishing and petroleum areas that are much closer to the Philippines and Vietnam (who claim the area) than they are to China.
The U.S. Navy sent a patrol plane near one of these dredging operations in support of its allies in the region, much to the aggravation of the Chinese military. The aircraft was warned by radio "This Chinese Navy - you go!" The United States does not have bases close enough to conduct maritime patrols in the area on a regular basis, which would emphasize the U.S. position that these areas China is grabbing are in international waters.
Back in Europe, the German Finance Minister has admitted in leaked private talks that the Greeks had better start planning on introducing scrip to pay government workers and pensions if they refuse to agree to bailout conditions.
Any market-affecting news over the long Memorial Day weekend will be political in nature, as there's no economic news on tap until Tuesday, when we get numerous reports on the state of the economy in the U.S.
Gainesville Coins wishes everyone a safe and happy Memorial Day weekend, as our offices will be closed on Monday, May 25. Orders may still be placed 24/7 on our website.
While enjoying the holiday, please remember the reason for it: