The release of last month's meeting minutes of the European Central Bank (ECB) and weekly jobless claims in the U.S. helped lift gold prices on Thursday at the expense of the dollar. Spot gold added $5 (+0.4%) to trade near $1,322/oz. The silver price was mostly flat at $16.97/oz. In the meantime, the Platinum Group Metals continued to move in opposite directions. Platinum jumped 1.2% to $982 an ounce while palladium slid back down to $1,073/oz.
The ECB minutes were interpreted as sufficiently hawkish by the markets, sparking speculation that the central bank will soon shift away from years of accommodative monetary policy. The euro jumped 0.75% on the news. With the Federal Reserve already planning to continue to normalize interest rates throughout 2018, many expect that the ECB is likely to gradually follow suit. The meeting minutes signaled the tightening of monetary policy in the eurozone could begin sometime early in the year. The next meeting of the ECB will be at the end of the month in Frankfurt, Germany.
In the U.S., the Labor Department reported that weekly jobless claims rose by 11,000 to 261,000 new claims, a three-month high. The measure tends to exhibit greater volatility during the holidays, leading to a muted reaction from the markets. However, the producer price index (PPI) increased by 2.6% over the course of 2017, according to the Bureau of Labor Statistics. The index is used as a measure of wholesale price inflation. This was the biggest annual increase in PPI in the States since 2011 and bolsters the case for central banks to tighten monetary policy.
Despite the PPI report, the dollar fell 0.4% on the DXY index on Thursday. The greenback was primarily weighed down by the stronger euro. The USD did manage to hold steady against most of its other major peer currencies. Stock futures pointed 0.15% lower on Wall St while shares in Europe and Asia fell modestly.
Bonds recovered somewhat this morning after Chinese officials backtracked on suggestions that the state planned to slow its purchases of U.S. Treasurys. China is the largest foreign creditor to the U.S. government, playing a significant role in the Treasury market. The 10-year yield eased back to 2.56% after a healthy auction of Treasurys on Wednesday. Of course, China may only be disputing the news about cutting back on buying U.S. bonds in order to unload their Treasurys at better prices.
Bitcoin tumbled on news that South Korea, one of the strongest sources of demand for cryptocurrencies, is moving to outlaw bitcoin trading within the country. Regulators are concerned that speculation is becoming rampant and threatening the stability of exchanges and financial institutions. Considering that China has already cracked down on bitcoin mining, these decisions by governments in Asia could have the effect of slowing the growth of the bitcoin supply and ultimately lift prices.
Crude oil futures continued to march higher. WTI crude added 25¢ (+0.4%) to $63.80/bbl. The Baker-Hughes rig count will be released tomorrow along with retail sales data and the latest consumer price index (CPI) in the U.S. France and India will also report CPI on Friday.
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