The dollar is falling for the second straight trading day after the dollar spot index opened about a quarter-percent in the red this morning. The DXY is below 87.5, down from last week's 4-and-1/2-year high above 88.0. Friday saw some profit-taking on the nonfarm payrolls report coming in below expectations. Stocks recovered from an early dip, turning positive around midday before sliding into the red in the last hour of trading.
There was an odd 10-second halt in silver trading on Friday. Following a rapid 55-cent surge, trading timed out, after which the silver price stayed in a tight range near $15.80. Gold saw its best day in 14 months, climbing $45 from after-hours trading just after midnight to Friday's close. The yellow metal sat at $1,178.50 at close after sliding to a yearly low of $1,133.80 earlier in the week. Both of the Platinum Group metals posted double-digit dollar gains while the stock market closed slightly lower. Treasuries saw some demand, as the 10-year note yield fell 4 basis points to 2.30%.
Yesterday in the Markets
Friday's closing numbers:
Economic News Affecting Gold
The recent slide for the greenback finally helped gold reverse direction, as all of the precious metals gained by more than 1% on Friday, lifting silver and gold from their lowest levels of the 2014 calendar year. With Wall St. again riding high to record closing numbers in the Dow Jones and S&P 500 last week, and most of the economic news pointing toward a healthy recovery in the U.S., the Fed may have wanted to reign in expectations when Chair Janet Yellen made comments criticizing the national governments of the West for the sputtering nature of the global economic recovery. Yellen cited the political gridlock in the U.S. and the debate over austerity or more stimulus in the EU as hampering the recovery, perhaps inserting a dose of cynicism to prevent the markets from overheating and forcing the Fed's hand in raising rates sooner than anticipated.
While the West is being dragged down by the weakness in the Eurozone economy, China announced at the Asian-Pacific Economic Cooperation (APEC) summit on Monday that the Shanghai and Hong Kong stock exchanges will allow crossover for investors, with shares of companies listed on the Hang Seng eligible for trade in Shanghai, and vice versa. The move is expected to help grow the two cities' reputations as the financial hub of the Asian markets.
International strife and uncertainty may have an influence on pressing gold prices higher, as geopolitical concerns abound from Russia to North Africa to Latin America.
Tensions are flaring anew in eastern Ukraine, where tanks were seen in the rebel strongholds of Donetsk and Luhansk. Most analysts presume these implements of modern warfare came from the Russians, who continue to take flak from the international community for their involvement in the conflict. Meanwhile, the Russian economy is practically on life support, as the Russian Central Bank revised its projections for 2015 GDP to zero percent growth when the burden of economic sanctions is accounted for. The central bank's guidelines for intervening to keep the ruble from completely crashing have been abandoned for the moment because Putin is blaming speculators for taking advantage of the bank's predictable intervention sales of foreign reserves. Last week was the worst for the ruble in 11 years, as the country's finances have yet to stabilize.
The ongoing civil war in Libya has led to a third oil field in the country being closed last week. The Islamic State (ISIL, or ISIS) has claimed the port city of Hariga in eastern Libya, which was producing 120,000 barrels of oil per day. Violence and intimidation have made operating the oil fields too risky. Taken in tandem with the oil pipe explosion in Saudi Arabia last week, the output disruption in Libya is helping to prevent oil prices from falling even further at the moment.
Riots and unrest are gripping Mexico City after the revelation that a group of missing college students, abducted six weeks ago, were apparently executed by corrupt police forces controlled by a local drug cartel that is allegedly headed by the wife of a former mayor of Iguala, the town where the students disappeared. Demonstrations held for the missing students turned violent, as protesters partially burned down the door of the president's ceremonial palace over the weekend. Citizens are outraged with President Peña Nieto, who has claimed that Mexico is becoming safer and less corrupt under his administration. To make matters worse, the riots and protests flared up after the country's Attorney General Jesus Murillo flippantly told reporters, "Enough, I'm tired," after answering questions about the case of the abducted students.
One of the stories to follow this week will be the settlement of £1.5 billion (about $2.4 billion) paid by the megabank UBS to regulatory authorities in the U.S. and U.K., including the American-based Office of the Comptroller of the Currency and the Commodity Futures Trading Commission, as well as the U.K.'s Financial Conduct Authority. The fines relate to the bank's role in allegedly rigging forex trades. On the "When will the Fed raise rates?" front, Boston Fed President Eric Rosengren will be speaking at Washington & Lee University in Lexington, Virginia tonight just after 5 pm EST.