With the big announcement about the future pace of stimulus from the European Central Bank (ECB) grabbing headlines on Thursday morning, the stronger U.S. dollar knocked gold prices from a high of $1,282/oz early this morning to about $3 down to $1,273/oz.
Spot silver lost 4¢ to $16.89/oz. Platinum traded just below unchanged at $920/oz while palladium gave up its early gains to $952/oz.
Here are Wednesday's closing numbers:
Gold: $1,277.30/oz (+$1, +0.08%) Silver: $16.92/oz (+2¢, +0.12%) Platinum: $922/oz (+$1, +0.11%) Palladium: $951/oz (-$4, -0.42%)
Dow Jones: 23,329.46 (-112.30, -0.48%) S&P 500: 2,557.15 (-11.98, -0.47%) Nasdaq: 6,563.89 (-34.54, -0.52%) DXY: 93.64 (-0.32, -0.34%) WTI crude: $52.18/bbl (-29¢, -0.55%)
The ECB took the first steps toward normalizing monetary policy in the eurozone by announcing that it will be cutting its quantitative easing (QE) stimulus in half to €30 billion per month. However, the central bank also indicated that it would extend the time frame of these QE purchases to at least next September.
This caused the euro to tumble 0.4% in response, which is perhaps what one would expect if the move by the ECB were more hawkish. Though the tapering off of QE will set the stage for interest rates to rise, the fact that the stimulus will remain in place for longer is somewhat dovish news. This is evidenced by not only the weaker common currency, but also that stock indices in Europe were sharply in the green this morning. The falling euro helped the dollar spike above 94.0 briefly on the DXY index on Thursday.
Stocks in the U.S. looked to rebound from losses across the board on Wednesday. Treasurys finally saw a bit of demand, as the benchmark 10-year yield fell below 2.43%. Even as earnings season continues, the uncertainty and anticipation over who President Trump will nominate as Fed chair is palpable on Wall St. The story took another interesting twist as the president described Janet Yellen, the current chair, as "terrific." At this point, it's impossible to predict which way Trump will ultimately lean—will he go for continuity with Yellen or Powell, or will he seek to shake up the central bank by picking a hawk like John Taylor? The only thing that's clear is that the president enjoys being strategically unpredictable.
In other economic news, jobless claims in the U.S. rose last week, up 10,000 new claims to a total of 233,000. This was actually less than what a consensus of analysts were predicting, however, and is also still near the lowest level of unemployment filings in over 40 years. It was the first time the Labor Department reported an increase in jobless claims in the past four weeks.
Shares in Shanghai rose 0.3% overnight after President Xi Jinping was elevated to the highest position within the Chinese Communist Party this week, solidifying his hold on power for at least the next five years (and likely far beyond). This decision by the 19th party congress means that, unlike the past two general secretaries of the CPC, Xi's leadership will not be "first among equals" and he will have more flexibility to implement his vision for China without any clear challenges to his authority.
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