Gold prices continue to retreat from Tuesday's highs, as the rebound in the dollar and good economic news from China hold sway. June gold futures are down this morning by nearly 1%, while spot gold is down a bit more than a half percent.
Silver, which totally ignored gold's correction yesterday to post a new 5-1/2 month high, is hovering just under unchanged this morning.
June gold futures settled lower for the first time in five days on Wednesday, shedding $12.60 to close at $1,248 an ounce. Spot gold closed near the daily low yesterday, $13.30 lower, at $1,242 an ounce.
Technical numbers for gold today have shifted a bit from early morning observations. $1,230 an ounce seems to be acting as first support. We expect that $1,225 will be the next line in the sand. First resistance is $1,240, followed by $1,243.
Fed Hawk Gets A Bit Dovish
The two big economic reports this morning were first-time jobless claims and consumer prices. The better than expected jobless data was not enough to counteract disappointing CPI numbers. That CPI report seemed to change the mind of at least one Federal Reserve hawk. Atlanta Fed president Dennis Lockhart, who had been holding out the possibility of an hike in benchmark interest rates in two weeks, said that this morning's CPI data changed his mind. “Based on what I’ve seen recently, I am not going to be advocating a move in April,” he said.
A Mixed Bag Of News
First-time jobless claims surprised traders, who were looking for a gain of 4,000 in the ranks of the newly unemployed. Instead, they got a drop of 13,000 applications, for a total of 253,000. This matched a low in March that was the lowest since 1973.
Consumer prices in March stalled out, posting a 0.1% gain. This was the result of lower food prices canceling out some of the gains in higher energy prices. The result is still better than the -0.2% read from February. Year over year, prices only rose 0.9%.
Core CPI, which strips out those volatile food and energy prices, was also up 0.1%. The year over year numbers were better, though, coming in at 2.2%.
Uncertainty over the outcome of the oil summit this Sunday had crude prices lower in early trading. Iran and Brazil both plan to increase production this year, and big North Sea producer Norway will still decline an invitation to attend.
Sentiment then turned around on this morning's report from the International Energy Agency, which forecast a large drop in shale production. They expect excess oil production to drop from 1.5 million barrels a day to 200,000 barrels a day in the second half of the year.
Asia Has The Dollar's (Green)back
The US dollar found support last night from Asia's two largest economies. The Bank of Japan jawboned the yen lower, saying that the central bank stood ready to intervene in currency markets if it were needed. On the mainland, China dropped the daily yuna fix by the largest amount since January.
That support was given up on the disappointing CPI print, which pushed back the possibility of a Fed rate hike in the near future. Higher interest rates would make the dollar more valuable, so the dollar rallies on speculation that a rate hike is imminent.
On the retail front, the recent rally in silver has seen greater demand for American Silver Eagles, After a week where 36,000 out of the allotment of one million coins went unsold, this Wednesday saw bullion distributors clean out both the weekly million-coin ration, plus those coins left over from last week. Not a bad three days for the US Mint.
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