Gold is set today to record its best quarter since 1986. Spot gold is up over 16%, for the first quarter, while gold futures are up nearly 17%. At 10am Eastern Time, gold is trading at $1,236.80. That's a $9.70 gain for April gold futures, and a $12.50 gain for spot gold.
A "window dressing" stock rally yesterday, as fund managers tweaked their portfolios for their quarterly reports, sucked the oxygen out of the gold market yesterday. Spot gold closed at $1,224.30, down $17.60. June gold futures settled at $1,228.60, down $8.90
Technical numbers have first resistance at $1,243, with the next barrier at $1,247. Support is seen at $1,225, backstopped at $1,216.
Stocks were buoyed yesterday when super-dove Charles Evans of the Chicago Fed said that low inflation would make it hard for the Fed to raise rates next month. This gave stocks enough fuel to close modestly higher.
A Sinking Dollar Raises All Ships
The DXY dollar index is in its fourth day of declines, as the greenback digs deeper into a 9 month low. The dollar is setting up to record its worst quarter since 2010.
Gold isn't the only market benefiting from the diving dollar. A basket of emerging market currencies is recording its best month in 18 years, as the suffering greenback lifts commodity prices. Equities in these same markets are getting a lift from both dovish Fed policy and a weaker dollar. Oil prices have also been supported, at least in part, by the dollar's recent swoon.
More Food For Doves
A surprise jump in first-time jobless claims last week provides more support for the monetary policy doves at the Federal Reserve. Analysts had expected claims to remain at the same rate as last month, but the numbers came in at a surprising 11,000 gain, to 276,000. This news pushed the dollar even deeper into negative territory.
More fuel was added to Fed Chairwoman Janet Yellen's concerns about major foreign markets today. Ratings agency Standard & Poors today kept China's debt rating at AA-, but cut China's sovereign debt outlook to "negative" from "stable." Concerns over the government's heavy debt load led to the downgrade.
This is still better than Fitch's rating of A+. Moodys took the same action of moving outlook to negative at the start of March. Chinese officials are reacting angrily over the downgrade, as they do every bit of negative news.
Warning: Rollercoasters Ahead
Non-Farm Payrolls will be released at 8:30am tomorrow. This is widely held as the most important economic report of the month. Last month saw 242,000 jobs added, but expectations are slightly lower this month. The average forecast is that 210,000 jobs were added. Unemployment is expected to stay at 4.9%, while traders are hoping for a gain in wages after last month's drop of -0.1%. This is the report that probably has the most effect on the Federal Reserve's decision to raise interest rates or not.
Other reports Friday are wholesale prices in France, Germany, and the UK, and the ISM manufacturing index in the US. Analysts are hoping that the last will finally cross over into positive territory, something that hasn't happened since September.
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