Gold prices are showing big gains this morning, breaking through a 52-week high. Gold is trading solidly over the $1,280 mark as it makes a run for the best weekly gain in 15 months. A close above the $1,280 mark will net a $50 weekly gain for gold. Silver is making a run at the $18 mark, after spot prices closed at $17.53 Thursday.
Precious metals and commodity prices are seeing tailwinds from the sinking dollar. While the sickly greenback is helping prices, there is still substantial demand providing the real driver for prices.
We're seeing first resistance at $1,283 (which is being tested enthusiastically this morning.) Many traders are seeing a clear run to $1,300 an ounce if gold can break secondary resistance at $1,288. First resistance is at $1,272, then yesterday's close at $1,266.
May gold futures settled at $1,265.50 an ounce for a 1.3% gain. Spot gold closed at $1,266.40 an ounce, for a $20.50 gain.
The dollar hit an eight month low against a basket of major currencies last night, and continues to fall. Japanese markets are closed today for the Showa Day holiday, but the yen has hit an 18-month high against the dollar in overseas trading. The yen, which is rallying after the Bank of Japan refused to expand its quantitative easing program, is showing its best start of the year since 1995.
Piling on against the dollar, the Chinese government pegged the yuan higher in the largest one-day fix since the yuan stopped being pegged to the dollar.
Wall St. is lower again, after a huge drop in Apple trashed the Nasdaq and pulled the Dow and S&P 500 lower. The S&P 500 saw its worst day in three weeks, while the Dow had its worst day in two months. Apple has been the worst performer in the DJIA index since it was added to the index 11 months ago. This was all part of a global sell-off in equities after the Bank of Japan did not announce new stimulus measures at its policy meeting yesterday.
Nymex (WTI) oil futures managed to close above $46 (up 1.5%) a barrel yesterday, taking heart from the seventh week of declines in US oil production (even though the glut still grew.) Crude was also helped by a weaker dollar. Both WTI and Brent hit new 2016 highs earlier in the session.
Economic news from Europe was better than the news from the US for once, First quarter GDP for the Eurozone as a whole increased by 0.6%, better than the expected. GDP growth year-to-year was 1.6%. Unemployment, still plagued by the moribund economies in Greece, Italy, and Spain, fell to 10.2%.
In the US, core Personal Consumption Expenditures, the Fed's favorite inflation gauge, was up barely 0.1% in March. Core PCE was up 1.6% year over year, but lower oil prices pulled the regular PCE down to only a 0.8% gain.
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