Gold prices this morning are digging in around yesterday's spot close at $1,244 an ounce, as the dollar is solidly higher on yen weakness. Spot gold is still set to post a marginal gain for the week. Silver, which has essentially been the wind beneath gold's wings this week, is up nearly 2% this morning.
News that the Bank of Japan might start paying banks to borrow from it dealt a blow to the yen, which tumbled nearly 2% against the dollar. This dollar strength is putting pressure on gold, Crude futures are basically ignoring the dollar rally, trading up over 2% from yesterday's close. Silver is also higher, being helped by a rally in industrial metals.
First resistance for gold today is around the $1,249 mark, followed by $1,253. First support is $1,242, then $1,239.
The Dow is caught in a tug of war this morning, as tech stocks plunge, but financials perk up. Wall St. in general was slightly lower Thursday on a mixed basket of earnings reports.
Crude prices fell from year-to-date highs yesterday, as continued builds in US oil stockpiles countered a jump in Chinese crude imports. June WTI futures fell $1, but stayed comfortably above the $43 mark. This broke a two-day rally where it gained a breathtaking 7%. June Brent crude lost 2.2% to settle at $44.53 a barrel. Oil futures this morning are gaining back those losses, and then some. They are set for the third weekly gain in a row, as US oil production falls under 9 million barrels a day.
Gold futures snapped a four-day rally yesterday, as the June COMEX gold contract gave up $4.10 to settle at $1,250.30. May silver futures retreated from a year-to-date high, shedding 4-1/2 cents to $17.09 an ounce.
One reason for the surge in industrial metals this week is the news that commodities futures are the new "get rich quick" fad in China. Bloomberg quotes Shanghai-based analyst Zhang Guoyu as saying “The great ball of China money is moving away from bonds and stocks to commodities."
The Bank of Japan went deeper into Crazy Land today, announcing that they may start paying banks to borrow money from them. The central bank already offers zero percent loans to banks that make loans to high-growth industries, in an effort to boost the economy. Is also offers zero percent interest long-term loans to banks who pledge to write more loans in general.
The BoJ is contemplating moving those interest rates negative at their meeting next week. This will, in effect, be paying commercial banks for participating in these two programs.
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