Gold is poised for a second weekly gain as it continues to hold on over the $1,400 mark. The yellow metal hit a two-week high in New York yesterday, and hit a fresh two-week of $1,421.60 overnight in Asia.
Gaines today are being limited by a stronger dollar, which has risen against the euro on EU economic woes, but has lost ground versus the yen. The dollar is experiencing choppy trading this morning as the DXY begins its lift over yesterday's close at 83.04.
In Asia, the Nikkei reversed its fall after news that factory output increased, and deflation was already showing signs of easing, thanks to the unprecedented quantitative easing by the Bank of Japan. Hong Kong stocks continued their dive, but mainland Chinese stocks posted their best month this year, even though they were lower today.
In Europe, the euro is off its three-week high as EU composite unemployment hits a new record of 12.2%, and German retail sales decline for the third month in a row. April's decline of 0.4% was somewhat of a shock, as a 0.4% gain was expected by experts. The news sent European stocks lower.
In the U.S., stocks opened lower on month-end profit taking, amid news that consumer spending dropped more than forecast, and personal income was essentially flat after rising 0.3% in March. Treasury yields are down from 13-month highs as more money returns to bonds.
UBS reports that Asian physical gold demand is still notable, though not at the unprecedented levels in April when prices were nearly $100 cheaper. Easing premiums in Asia indicate that the supply shortages are beginning to ease, as Western investors take delivery and resell in China and India.
Speaking of supply, the Chilean environmental minister has predicted that Barrick's $8.5 billion gold mine in his country will remain closed for at least one to two years, as the company corrects faults that were polluting local water supplies.
by David Peterson