Some good economic news out of the EU for a change was outweighed by the Polish central bank announcing a deep rate cut, and a plunging euro currency ahead of tomorrow's European Central Bank meeting where the details of its money printing stimulus measures are expected to be revealed.
The euro broke down through support at $1.11, dropping to a six-week low. This propelled the dollar to an 11-1/2 year high in morning trading in Europe.
ADP private sector payrolls numbers came in lower than expected, a gain of 212,000 jobs against an expected 219,000. This sent Wall St lower again this morning, despite slightly better than expected final numbers for February service sector PMI.
Gold continues to bounce in a very narrow range, capped on the upside by a rampaging dollar, and supported on the downside by demand.
Yesterday in the Markets
Gold and silver were softer on Tuesday, while platinum was mostly steady, and palladium hung on to big gains that were earned on Monday. Stocks in the US ended in red yesterday,
Factors Affecting Gold Today
India's central bank shocked Asian markets today, announcing a surprise cut in benchmark interest rates outside of its normal meeting schedule. This is the second time in two months that India has cut interest rates. On the European side, the Polish central bank did a bit of a economic shock and awe with a huge half-percent cut in interest rates, bringing them down to a record low 1.5%.
Despite generally good economic news in the EU for a change, but nervousness over the ECB meeting tomorrow is muting reactions in European equities markets. Of course, all this rate cutting is boosting the dollar, as the US is apparently the only major economy not trying to cheapen its money supply. This is putting a lot of pressure on gold, as it raises the price in every market except the US.
The big news of course will be the ECB meeting, at 7:45 EDT tomorrow. The Bank of England will meet tomorrow as well. First-time jobless claims and factory order in the US have the chance to move markets as well.
by Steven Cochran