First-time jobless claims rose by 12,000 last week, coming in at 290,000 new jobless benefits applications. Expectations were for 280,000 new claims, but the slight miss did little to move the markets this morning. Moreover, the Labor Department cited no particular reason for the increase, as this is now the ninth consecutive week with less than 300,000 new jobless claims. Many analysts take this as a sign that unemployment is at least stable and the labor market may be shoring up, as U.S. companies are currently hiring at their fastest pace in 7 years.
This had little effect on trading, although all three U.S. stock indices oddly plummeted in unison this morning after opening about 0.5% in the green, falling all the way to unchanged before bouncing back positive.
Yesterday in the Markets
Wednesday's closing numbers:
Economic News Affecting Gold
The dollar caught a bid around noon in New York trading, pulling gold just slightly below unchanged on Wednesday's close. The Dow Jones and S&P 500 were weighed down by falling energy stocks and the announcement of the multi-billion-dollar fines relating to Forex rigging. The two indices struggled, unsuccessfully, to climb out of negative territory, finishing the day flat. These concerns over the banking sector did, however, help the dollar reach a one-year high against the British pound. The Nasdaq was up about a third of a percentage point as Apple stock hit a record high, buoying the entire index.
If not for the daunting headlines about Forex fines and bank misconduct in the precious metals markets, stocks probably would have performed fairly well. Wal-Mart reported strong earnings, beating estimates, while Hasbro is considering acquiring DreamWorks, the successful film studio that produces many of Disney's animated films. DreamWorks stock surged 15% on the rumors. Despite breaing their recent winning streak, the stock markets have been inexplicably robust, which is probably suppressing any safe haven demand for gold.
OPEC has rejected any cuts to the cooperative's production projections, opting instead to maintain current levels of production. This isn't helping the oversupply of oil as a global economic slowdown has reduced energy demand throughout the second half of 2014. Crude oil continues to fall, as Brent crude fell below $80/bbl for the first time in four years. West Texas Intermediate was trading under $76, and neither benchmark has shown any indication of rising. This morning's Energy Information Administration (EIA) petroleum inventories report revealed that supply remains abundant, U.S. production is its strongest in decades, and crude oil futures fell to below $76.
Meanwhile, the economic slowdown that is threatening international trade is becoming more pronounced in China, which is on pace for its weakest year of growth in over two decades. Data released by Beijing showed that factory output is weakening and private investment is waning, nearing a 13-year low. Although most countries in Europe and abroad would be thrilled to see their economy grow by 5% this year, in China's case, this is a stark retreat from the near-double-digit growth the People's Republic has experienced over the last several years. The slowdown also spells hard times for Russia, who is already mired in a severe recession and now must face the prospect of additional sanctions from the U.S. and the European Union. After finally posting gains the day previous, the ruble again tumbled on the news.
Closer to home, protests and unrest are sweeping across Mexico in response to the sordid story of 43 students who were arrested by corrupt police and subsequently handed over to the country's notorious drug cartels, who are suspected in their murder. Angry protesters set fire to public buildings and rioted in the streets in and around the home of the slain students, demanding a government response to the violence and rampant corruption. In addition to possibly destabilizing the country, the protests are also likely to interrupt normal gold and silver production at Mexican mines. Mexico is actually the world's largest producer of silver and its 8th biggest gold producer. Many of the world's richest silver mines are located in Mexico, and it is one of the country's bellwether industries; shocks to the silver price have been known to "make-or-break" the year for the Mexican economy. The chaos gripping Mexico is just one more strain on the dwindling global silver supply, which most traders and analysts are declaring is currently oversold.
In India, however, demand for gold has been strong. With the traditional festival season beginning in the fall, India saw a jump in gold imports during September and October, totaling nearly 300 tonnes. This number is staggering over such a short period, as the citizenry of India collectively outpace most government Treasuries in their pursuit of the yellow metal. The gold price has been falling or moving sideways over that time in spite of robust Indian demand; the inevitable easing of India's gold imports following the new year could drive gold prices even lower in the near-term.
Fed Chair Janet Yellen is speaking today at 12:45. Just about every time she opens her mouth, the markets do something, so investors will be listening closely and intently watching for reactions by traders.
There are also rumors that this weekend's upcoming G20 summit may include discussion of new international banking regulations that could make the practice of "bailing in" banks with depositor funds a standard global practice. If these rumors come to fruition, it would undoubtedly have an enormous effect on market confidence in the sputtering global economy, as well as influence the saving habits of people all over the world.