A disappointing durable goods report showed orders fell 3.4% last month, a bad sign for U.S. manufacturing. Although the dollar finally slipped back this morning, sliding about 0.75% on the DXY down to 94.0, its strength over the last year dragged down the earnings of several bellwether U.S. firms, including Caterpillar, Microsoft, DuPont, and Procter & Gamble. The combination of these two factors had U.S. stock indices sharply lower this morning, with the Dow Jones down over 250 points before 10 am EST, and each index about 1.5% in the red. This helped push gold back above $1,285/oz, up about 0.60%.
Yesterday in the Markets
Yesterday saw the precious metals all consolidate, along with some profit-taking, after last week's rally. Gold did maintain its level above support at $1,277, although silver gave up some of its gains to fall back to about $17.95/oz. Stocks were marginally in the green,
Factors Affecting Gold Today
The big hit to the U.S. markets this morning was not limited to the durable goods orders coming in so far below expectations; the poor numbers for industry-leading U.S. companies also pulled down stocks. Microsoft shares fell almost 9%, DuPont slid by 3%, and Procter & Gamble was 2% lower, all citing the stronger dollar as cutting into profits. The same story applied to Caterpillar, a large construction equipment maker, as shares fell over 7% on the rising dollar and cratering oil prices. In addition, Apple, Yahoo, and a slew of other firms will release their quarterly earnings reports later today, as well.
Gold was about $10 higher this morning, near $1,291/oz, with the DXY slipping and expectations for the economy souring. Each of the other precious metals were also slightly higher. Although travel is still seeing some restrictions in the Northeast, the blizzard that has been battering that region is thus far not affecting New York City, so the weather shouldn't have a serious effect on commerce in the Big Apple.
In line with the slowdown and poor economic data, both from the U.S. and abroad, the Case-Shiller HPI showed a decline in home price growth--and this comes even with incredibly low mortgage rates at the moment. Interestingly enough, consumer sentiment registered at a 7-year high, so it would appear that the public may not be as attuned to the weakness in the economy as investors seem to be. Treasuries gained amid the negative sentiment, with 10-year yields falling to just 1.76%.
The big news will come at 2 pm EST when Fed Chair Yellen speaks after the conclusion of the FOMC meeting.