This week's market playbook is all about risk appetite, and the return thereof. Strong earnings and surprises on that front brought a temporary end to hand-wringing among investors, and they signaled that risk-taking might be on tap at least until such time as fresh negative news impact the markets they are now playing in. The dollar thus took a hefty punch and declined 0.50 on the trade-weighted index overnight. It was last seen trading at the 79.50 mark, while black gold took such cues to mean that it can spend a day or two above the $60 level - it was last quoted at $60.41 per barrel.
Gold prices popped strongly, and early on, this Wednesday, reaching a two-week high. Spot bullion rose $15 in early going, to reach $940.30 on the bid side. Stimulated by the aforementioned rising penchant for risk-taking, market participants did jus that; they pushed gold to very near its near-term resistance area - thought to lie between here (at $940) and $950-ish. The US CPI rise of 0.7% recorded this morning certainly did not boost the greenback after its release, and metals prices hung on to their gains with ease. Empire State manufacturing data only added to risk-taking in various markets by return-starved investors.
The 50% retracement of the overall move is bringing gold to an area which it might have difficulty successfully surpassing. Should it fail at the upper end of this zone, the metal would be once again poised to decline to the low $900s. And thus, the summer range rolls on...
China's gold reserves remained unchanged in June, this according to a statement by its central bank. Much to the chagrin of perma-bull newsletter writers, the country did not add to its gold stash last month, albeit its foreign exchange reserves surpassed the $2 trillion mark as of the latest tally. The country now holds 1054 tonnes of bullion, and it is in a virtual (50 tonne) tie with the famed SPDR gold holdings. The latter declined nearly 1.5% the other day, bringing its total to 1094 tonnes.
Silver showed its own mettle this morning, gaining nearly 50 cents in the initial 20 minutes of trading - it rose to $13.35 per ounce without much difficulty. Platinum climbed robustly, adding $27 to reach $1156.00 per ounce, while palladium gained a more modest $2 to start near $244 per ounce. About the only significant news on the automotive front, was the indication that GM (now resurrected) will spend as much on plugging its LaCrosse sedan in the upcoming six months, as it normally spends on all its cars during a full year. Hope consumer bite. They have been utterly recalcitrant thus far, this year.
Look for continued attempts to fill the void up to $950 created a few days back with the dip to near $905. While we do not see this as a lasting move, participants are enjoying the ride for the moment. Profit-taking has not yet become the order of the day. It will.