Gold prices are moderately lower this morning, leaking downward to give back half of Thursday's significant gains. Silver is also lower, but is still holding on to 2/3 of yesterday's gains. At present levels, spot gold will end essentially flat for the week, while spot silver will see a slight loss.
The dollar is marginally higher, trying to regain Wednesday's four-month highs that were taken out on Thursday's poor performance. Part of the upward momentum for the dollar is the overnight losses sustained by the British pound. Composite PMI for the UK fell to a seven-year low, to numbers not seen since April 2009, heightening expectations that the Bank of England will soon cut interest rates.
On Wall St., stocks opened lower, continuing a correction that began yesterday. That drop Thursday, sparked by poor earnings results, spilled over into global stocks overnight.
Crude oil futures are down this morning, continuing a slump that saw them lose more than 2% yesterday.
At 10 am Eastern Time, spot gold is trading at $1,321.90, a loss of $8.80. Spot silver is at $19.61, 13 cents lower. The 9:45 release of US manufacturing PMI showed wholesale activity at 52.9, against expectations of 51.9. This has put some extra pressure on precious metals this morning.
Precious metals contracts ended a rocky session with decent gains Thursday. Gold futures gained nearly 1%, adding $11.70 to settle at $1,331.00 an ounce. Silver futures gained 20 cents, 1%, to settle at $19.81 an ounce. Safe haven assets garnered attention as stocks corrected from recent record highs.
Spot gold prices added $15.40 to close at $1,330.70, near the upper end of the day's trading range and up 1.17%. Spot silver also notched gains, adding 37 cents to close 1.88% higher at $19.74.
Treasury prices followed much the same course as gold Thursday, down in early trading, but recovering in the afternoon. The yield on the 10-year note recovered to basically unchanged at 1.56% compared to yesterday's 1.57%. Two-year yields fell from 0.73% to 0.69%. Treasury yields fall when prices rise, and vice versa. MarketWatch warns against letting your search for yield lead you deeper into junk bonds, saying high-yield bonds are now too high-risk for your money.
The reason for the advances of safe haven assets Thursday was US stocks falling from record highs (showing just how fragile market sentiment is right now.) News that security forces in Brazil arrested 10 home-grown Daesh wannabes who were planning to attack the Olympic Games in Rio de Janeiro rattled US stock markets. The ten people arrested had not even bought weapons yet, but were brought in before they could injure anyone. They had no connection to ISIS except retweeting the terrorists' propaganda.
Markets are already looking forward to the Fed's Open Market Committee meeting next Tuesday and Wednesday, followed by the Bank of Japan's policy meeting on Thursday. To wrap up the week, the initial reading on US GDP for the second quarter will be announced. Everyone is expecting a much better performance than the 1.1% recorded for the first three months of the year.
The Dow Jones Industrial Average ended a nine-day rally, falling 78 points to end 0.4% lower. The S&P 500 lost 0.4%, and the Nasdaq shed 0.3%. The Nasdaq was the only index of the three that saw positive territory in any meaningful way, but all three were solidly in the red by noon.
Feeding on the same skittishness, the dollar fell from four-month highs hit Wednesday to close modestly lower.
Oil futures fell by more than 2% Thursday, dragging energy stocks down and contributing to Wall St.'s losses. September WTI contracts settled at $44.75, down 2.2%. September Brent futures lost 2.1% to settle at $46.20 a barrel.
MarketWatch notes that more and more analysts are getting nervous over the "irrational exuberance" of stock buyers lately. Today's pause in a long string of sequential record closes may not be enough to assuage the fears of the more observant traders.
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