Gold prices are testing new lows around the $1,320 mark this morning, as the euphoria in equities continues. Spot silver prices are down modestly, but holding above yesterday's lows for the most part.
The Bank of England surprised market watchers this morning by standing pat on interest rates. This inaction caused the FTSE index in London, which had been up by 0.8%, to immediately give up all gains for the day. The British pound went nuts, rising 1.8% against the dollar, and tripping the greenback into the red. The pound also gained against the euro, by 1.3%.
Technical numbers for gold this morning stand at $1,319 and $1,319. Resistance stands at $1,326 and $1,333.
Stocks were riding high overnight on expectations of further stimulus (both fiscal and monetary) in Japan, when the Bank of England decision was announced. This stopped equities in their tracks, until traders saw that many members of the BoE policy committee were in favor of a rate cut at their next meeting, three weeks from now.
This vote of confidence in the UK's economy by the central bank, however short it may be, saw the pound jump and gilts fall. US Treasuries also fell, with the yield on the 10-year T-note rising to 1.53%. The euro rose to a nine-day high, putting additional downward pressure on the US dollar.
The flagging dollar is helping crude oil prices, which have seen some drastic whipsawing over the last few days. West Texas Intermediate and Brent futures are both trading more than 1% higher. Yesterday, both fell more than 4%, wiping out Tuesday's 4% gains.
The economic front in the US got some good news this morning, which is helping stocks reach new record highs. Producer prices rose 0.5% in June, compared to a 0.4% gain in May. This is the largest one-month gain in wholesale prices in a year. Analysts were expecting the rise in producer prices to moderate to 0.3%. Much of the increase was from higher oil prices.
Core PPI, which removes the volatile food and energy sectors, also rose in June, by 0.4% Analysts had expected core price to rise by only 0.1%. Measuring year-to-year, PPI gained 0.3%, while core PPI gained 0.9%.
First-time jobless claims remained unchanged from the previous week, with 254,000 new applications being filed. Market watchers had expected a modestly higher 265,000.
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