Gold, which has been trading the last three days in a very tight $10 range between $1,235 and $1,245, popped in early morning trading to test the $1,250 level, briefly breaking $1,251. Silver also rose out of its tight trading range to briefly break $21.30. Platinum is solidly higher, while palladium is also showing gains.
Curiously, the dollar spiked at the same time as precious metals. If it had not, we would have seen a much stronger surge on the precious metals charts. The dollar is posting gains against the euro, but is slightly weaker against the yuan and yen.
Forex traders got caught short overnight when UK retail sales were announced shockingly higher than expected, which caused the pound to surge. Many traders were expecting a drop and were caught on the wrong side of the trade.
Wall St is lower, despite good economic news this morning. Housing starts for December fell 9.8%, but were still above economists' estimates. Single family home starts were down only 7.0%. These numbers are still stronger than they were last summer, and helped close new home construction in 2013 as the best since 2007. Industrial production for December was reported up for the fifth month, rising 0.3%.
This news hasn't helped the stock market, which is dealing with poor earnings reports from major companies such as Best Buy, GE, and Morgan Stanley.
European stocks hit a fresh 5-1/2 year high, as Portugal and Spain continue to recover from economic near-collapse. Rising risk appetite among investors has help push bond yields lower, and boosted domestic stock markets.
In Asia, the Nikkei was off slightly, reacting to yesterday's poor earnings reports from the U.S., but was supported by good reports at home. The Hang Seng in Hong Kong closed at a two-week high on tech stocks, while the Shanghai index was slightly lower.
Barring a blow-up in the Middle East or shocking revelations from ongoing investigations into currency market manipulation by the Too Big To Fail banks, markets will be driven by earnings until the FOMC meeting at the end of the month.