If it is Thursday, it must be jobs (numbers) day, and the day to reverse Wednesday's gains in gold prices. Evidently. The US dollar was seen benefiting from the expected number of jobs lost and a US unemployment rate that is inching ever closer to ten percent. Thus, gold unwound the bulk of yesterday's gains prior to the opening of its last session for the week.
Traders will hang the 'gone fishing' signs up on their workstations most likely well before the finish of futures trading this afternoon. Gold, meanwhile, is left battling to overcome the $942/945 resistance band - an area below which it fell back before the middle of June, and one that has now presented difficulties for the metal for almost a dozen sessions. Even if rebounds from dips were as energetic as those seen yesterday. We still target the $900 level as the one-month projection.
New York spot gold started the session with an $8.30 loss this morning, quoted at $932.00 per ounce, after overnight lows that came in at $929.80 were recorded. The US dollar clawed back to above 80.08 (up 0.44) on the trade-weighted index and was awaiting the all-important jobs data before anything else. Crude oil fell $1.02 per barrel to $68.28 - the commodity appears to have mounting problems with maintenance above $70 in light of current economic (and demand) conditions.
Geopolitics getting tenser had little effect on the markets this morning. N.Korea launched two short-range missiles (someone let them know it is not the 4th just yet?) while the US engaged in a major operation in Afghanistan, intended to take back a key valley from Taliban forces. Silver lost 29 cents to start at $13.41 per ounce. The noble metals sank back as well, with platinum losing $16 to $1183 and palladium slipping $5 to $248 per ounce. Rhodium was flat at $1300 per ounce.
The statistics revealed this morning on the jobs front indicate...more of the same. Namely, that the planet's largest economy remains mired in a deep recession, and that -stimuli notwithstanding- the going is really tough. The number to take home this morning is 467,000. - a figure far greater than the 325 thousand analysts had penciled in. Ouch. Unemployment stood at 9.5% - and President Obama's allusion to the round 10 percent number is not that far off now...
Stock futures dipped following the jobs report, as did crude oil. Treasurys, meanwhile, edged higher on the data, as did the dollar. Gold -and it must really by jobs Thursday now- sank to near $930 following the news. Five hours to go in this trading day. Or less, if your fishing pole is at the ready...
Over in Euroland, things are not much better, employment-wise at least. The region is in a neck-in-neck race with the US to see who is most likely to walk away with the 10% title before the year draws to a close. It is currently only a fraction behind the US jobless rate. ECB head Mr. Trichet is widely seen (and now also heard) as keeping interest rates at 1% (or possibly lower) for not only this year, but perhaps for most of the next one, as well. Thus, again, the euro takes a dip and the greenback gets boosted by a safe-haven play among currency speculators. It must be Thursday. Oh, and Sweden's Riksbank unexpectedly cut the benchmark lending rate to a quarter percent. ('Cause things are just so swell over there as well...)
Although the trade sees a material impact on the greenback only if the unemployment figure deviates by more than 10 or 20 percent from median expectations, the US currency continues to reflect jitters engendered by various (and contradictory) comments emanating from Beijing about its status. Yesterday, the dollar took a hit following Reuters reports that China might ask for a debate of proposals to create a new, trans-global reserve currency, when the G-8 convene in Italy soon.
Today, the country's Vice Foreign Minister, He Yafei, told reporters that we hope that as the main reserve currency the exchange rate of the US dollar will be stable. It would be a lot more stable, and possibly higher, if Mr. Yafei's colleagues had a unified stance on that which represents a near-$2 trillion figurative pyramid in the figurative vaults under Tiananmen Square.
Something else that is making the floors of various vaults groan under its weight, is platinum. South Africa's Business Day reports on the glut in the noble metal, and on the shrinking number of takers for it. On the other hand, things appear to look fairly bright for close-cousin palladium, even after having posted a stellar quarter. In any case, quick, someone jump-start the auto industry, please?
PLATINUM stocks in Swiss vaults were rising as global automotive demand remained weak, suggesting this year's price gains would be subdued, analysts said this week. But palladium stocks were still falling, and while there was still more than enough palladium available for industry and investors, the price was starting to firm.
SA is the world's biggest producer of platinum, which accounts for 35% of its mining output, and the second-biggest producer of palladium. Prevailing rand strength, combined with a subdued price outlook, would hit platinum companies and SA's export earnings. James Moore of TheBullionDesk in London said platinum struggled to hold above 1200/oz at the end of the June quarter. Technical indicators suggested it the metal could trend lower.
Given the metal's fundamentals and factors such as SA's pay talks and possible approval of exchange- traded funds (ETFs) in the US, we expect dips to find further support from longer-term investors
Palladium posted the strongest of the precious metals gains in the June quarter, closing at 250/oz. It was vulnerable to short-term weakness but could test 258-262 as it was increasingly substituted for platinum in vehicle autocatalysts.
Precious metals refiner Heraeus said in its weekly report that palladium was benefiting from chart-based trading and a rise in ETF holdings, now at a record level. But platinum fell sharply after the World Bank reported the global economy was worsening, causing investors to sell. Investment bank UBS recently reported Swiss stocks of platinum were at their highest level since 2007 as platinum destined originally for autocatalyst manufacturers had to be stored into Swiss vaults. Unless the global economic outlook improved significantly, the price of platinum could drop to 1125/oz, Heraeus said.
Bloomberg reported New York- based research house CPM Group forecast platinum could average about 1200/oz this year, down 21% from last year's average of 1522/oz, while palladium could average 240/oz, or 29% below last year. It noted rising investor demand for palladium and its substitution for platinum. Société Générale said this week that commodities could continue to attract investors as a hedge against inflation and would benefit as countries started to emerge from recession in the second half of this year.
And now, for something completely different. Beatle-flavoured fun. Coming your way in Vegas - no, not at the Love show, but on the very stage at Freedom Fest next week. We cannot wait to see you all in Las Vegas next week. We're going to have non-stop intellectual feasting and fun for three straight days. Almost 1,400 people have already signed up for what has been called the (other) greatest show on earth. Producer Dr. Mark Skousen had this to say about the gala evening, in a letter to us yesterday:
People are still abuzz about last year's grand finale. Our George Bush impersonator brought the house down. One attendee told us, I haven't laughed this hard in ten years. He really was incredible. Some attendees didn't realize he was an impersonator until 30 minutes into the show. I urge you to attend this year's grand finale. Here's what we have in store for you:
--Enjoy a fun cocktail party & music with all your friends and speakers starting at 6 pm. This is an opportunity to mingle with all our speakers, including Larry Kudlow, Steve Forbes, Charles Gasparino, John Mackey, Steve Moore, John Fund, and our famous authors. (Be sure to bring your camera.)
--Enjoy a five star dinner, including a spectator desert, with friends and speakers.
--Watch photographs of attendees highlighted on the big screen during dinner.
--Join in the singing of our FreedomFest theme song, Freedom & Gold, A rousing Irish number sung only once a year!
--Enjoy the induction ceremony of the Free Market Hall of Fame. Our emcee extraordinaire Chip Wood will ring the Liberty Bell as Steve Forbes reads the names of six famous patriots of the past join the illustrious hall of fame.
--Hear Larry Kudlow give a resounding upbeat speech about the future of freedom in America.
--Sit back and relax as you enjoy the main event as Yesterday, the world's #1 Tribute Band, entertains you with your favorite Beatles number. Why spend $165 to see the Love show at the Mirage when you can rock to the sounds of the Fab Four right here at Freedom Fest?
--The Yesterday band will play a special libertarian version of the John Lennon song Imagine just for FreedomFest attendees. Imagine that!
--Dancing with the Stars -- Here will be your chance to dance up a storm to the music of the Beatles and Yesterday -- and maybe you'll win a prize!
The cost for this unforgettable evening is only $75, and that includes everything -- the cocktail party, dinner, program, and the dance.
Won't you join me on the dance floor? Please sign up now by calling Tami Holland at 1-866-266-5101. Space is limited, so you should sign up before coming to Las Vegas.
As Paul McCartney might say, Let's come together -- at the Saturday night banquet. See you next week!
Thanks, Mark. Kitco will not miss this event - there are more than a few Beatles (and Forbes) fans among our staff.
Hello Goodbye. Happy 4th of July! We'll see you on the other side of the long weekend, reporting from Sin City.