Gold is seeing selling pressure this morning after gaining nearly $16 in yesterday's rally. A rush into gold and Treasuries was triggered by a sell-off in stocks. June gold futures are down $8.30 and spot gold is down $10.00 at $1,221.20.
The oil market is seeing short-covering up from one-month lows on a drawdown of US crude stockpiles and hopes that the April 17 meeting of oil exporters in Qatar may actually accomplish something.
First support for gold is seen at $1,215, then $1,209. First resistance is $1,224 then $1,229
A rally in oil futures this morning has helped European stocks and the US dollar. Yesterday, the American Petroleum Institute reported a surprise 4.3 million barrel drawdown in US crude supplies, as refineries come back online from spring maintenance. Oil prices were further helped when Kuwait's oil minister told reporters that he thought a production freeze among oil producers could be agreed upon, even if Iran did not attend.
At 10:30, the US Energy Information Agency reported that crude stockpiles last week fell by 4.9 million barrels. This was more than the industry trade group API had reported at -4.3 million barrels, and more than the 3.15 million barrel draw expected by analysts.
The euro is down after its best quarter in five years, on news that IMF managing director Christine Legarde and German chancellor Andrea Merkel publicly disagreed over the need for debt forgiveness of Greece. The IMF says that there is no way that Greece can recover without debt forgiveness. It refuses to sign on for another loan to Athens without that debt forgiveness. Merkel, speaking for Germany, said that debt forgiveness was out of the question.
The dollar, which had rallied from a 17-month low against the yen overnight, erased its gains this morning ahead of the FOMC minutes despite the weakness in the euro.
The big news of course is the FOMC meeting minutes to be released at 2pm today. With stocks bracing for a disappointing earnings season, the Fed may be the biggest mover for the markets in the near term. Fed Chair Janet Yellen appears in a roundtable discussion tomorrow night with former Fed chiefs Ben Bernanke, Alan Greenspan and Paul Volcker. The minutes from the latest ECB meeting will be released Thursday morning.
Worries over the ECB pushing benchmark interest rates deeper into negative territory was highlighted in a $3.7 billion auction of 2-year German bonds. These bonds were sold at a yield of -0.48%. Unless you're a fund manager or a bank needing to park money in cash equivalents, one has to wonder why aren't investors buying gold instead?
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