Gold prices are up solidly this morning, hitting an early morning high of $1,289.90 in New York. At 10am, gold is trading at $1,286.00. Spot gold is up $13,20, and June gold futures are up $13.30. Today's gains are being helped by some slightly downbeat data out of China, and a marginally weaker dollar. The greenback is pulling back slightly, after hitting a two-week high on Friday.
Gold is currently pushing against the first resistance level of $1,287. A break above this point puts $1,296 in play A close above $1,290 may be a set up for another run at $1,300. First support is at Friday's close of $1,272, then $1,263 as technical selling is triggered.
Crude oil futures are solidly higher this morning, as Goldman Sachs throws in the towel (for now) on its bearish oil predictions. The megabank now forecasts Nymex crude to hit $50 a barrel in the second half of the year on supply disruptions, but warns that prices at that level may wake up some of the zombie shale operations. Shortly after 10am, both WTI ($47.68) and Brent crude ($49.34) were up over 3% to the highest point since last November.
Sentiment in Nymex crude futures was depressed over supply worries Friday, but trimmed losses when the Baker Hughes oil rig count was announced at 318. This is 10 fewer than the previous week, and the eighth strait week of declines.
In equities, the Dow and S&P 500 both logged the third weekly loss in a row. The Nasdaq was down for the week for the fourth time in a row. Stocks are higher this morning, riding sharply higher oil prices, and Apple. Reversing big losses that took it to 52-week lows, the Big A has jumped on new that Berkshire Hathaway bought $1 billion worth of Apple stock in the first quarter.
The indices are being held back by the manufacturing sector this morning. A shocking Empire State Manufacturing index printed at -9.0, compared to a +9.6 in April. Analysts were expecting a +6.5.
In China, a raft of downbeat data led to early weakness in Asia, and a safe haven run on the Japanese yen. Beijing's stimulus efforts have not borne the fruit they hoped for. Industrial output dropped from 6.8% in March to 6.0% in April. The market had expected a reading of 6.6%. Retail sales grew by 10.1%, compared to 10.5% in March.
What's causing the current bull market in gold? The dollar? Brexit? Fears of a "hard landing" for the Chinese economy? The main factor driving gold prices so far this year have been the various central banks. Gold ETFs have grown 25% since January, and now hold more gold (1,822.3 metric tons) than they have since December 2013.Negative interest rates in Japan and Europe mean that it costs less to hold physical gold now (storage fees) than keeping your cash at the bank, where negative interest rates chew away at your deposits.
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