There's a three day weekend starting this afternoon in the U.S. and U.K., which will take the world's top two gold markets offline until Tuesday. Considering all the geopolitical uncertainty across the globe right now, traders are going to move into a risk-off stance.
Gold and silver options expiry is Tuesday as well, so longs and shorts in the paper metals market will have to be closed out or rolled over.
Precious metals eased overnight from Thursday's close in New York, as a weak euro boosts the dollar (strong dollar = lower gold prices, as it takes fewer dollars to buy an ounce.) The German Ifo business expectations index fell to 110.4 from last months' 111.2. This was under analysts' expectations of 110.9. German GDP for the first quarter of 2014, however, came in exactly as expected, twice as strong as Q4 13: +0.8% from 0.4% quarter to quarter. The year over year numbers came in at 2.3% from 1.4%.
The markets decided to ignore the GDP and focus on the Ifo, sending the euro to a three-month low. The market feels that quantitative easing by the European Central Bank is all but certain now.
Another thing unsettling markets are the various elections going on in Europe. Separatists in eastern Ukraine have vowed to disrupt presidential elections this Sunday, and are following through with attacks and threats against poll workers and polling stations. This despite Russian president Putin calling for calm, and promising to respect the election results.
Anti-austerity and "Euroskeptic" candidates, who wish to see the power of the EU reduced, are making gains over previous showings in the latest elections for the European Parliament. Economic recovery plans in the European community may be derailed by these minority parties from both the left and the right.
In British elections, the UK Independence Party (UKIP), a right-wing populist Euroskeptic party, is gaining in local elections at the expense of the Conservatives. The UKIP wants tighter restrictions on immigration, and disengagement from the EU.
In Asia, the Thai military command, exasperated at the refusal of the two main opposition parties to negotiate as a conference aimed at restoring order to the violence-torn country, ended the meeting by declaring martial law earlier this week. As neither political faction was willing to budge in later negotiations, the military took control of the government in order to push through reforms itself. This is the 12th time the military has taken over Thailand since a constitutional government was established in 1932.
Violence is expected from the Red Shirts of ousted political strongman Thaksin Shinawatra, who was ousted as prime minister in 2006 over corruption charges, and fled the country to avoid prosecution. His political machine propelled Thaksin's sister, Yingluck, to the prime minister's office, but accusations of corruption led to violent protests that have rocked the nation since last November. The Constitutional Court of Thailand removed her from office this month for violations of the constitution, but her party still held the reins of power until yesterday's coup.
The big news in the gold markets today is that Barclays was fined $44 million for gold manipulation by Britain's Financial Conduct Authority. Good news for honest gold traders, as regulators crack down. We'll have a complete report later today.