London 13/07/2012 -
Bullion prices sagged Thursday as continued flows towards safe-haven assets pushed the US Dollar to a fresh two-year high against the euro at 1.2164 and drove the yields on both the German and US 10-year notes to the lowest since the start of June at 1.23% and 1.47%.
Steady offers were seen across the Asian and European session with selling pressure continuing into the US session. Both silver and platinum posted the days lows shortly after the US opening, trading down 2.5% and 1.8% respectively; gold meanwhile set its low around the PM fix with the metal off 1.4%. While the dollar remained firm across the rest of the day bargain hunting emerged to lift the metals towards the end of the day leading the complex to end the floor session down a net 0.5%.
Interestingly, in spite of the overall negative tone to risk sentiment silver closed in positive territory - up 0.2% versus gold’s 0.6% decline; the AU/AG ratio dipped from a peak of 58.7 to 57.2 as a result. Perhaps this is explained by a 5.2Mozs increase in Sprott ETF holdings.
Risk assets remained under broad pressure across the day; data showed fewer than estimated US Jobless claims last week (350k vs and estimated 376k). The CRB Index settled down 0.2%; the Stoxx 50 Index 08%, DJIA 0.25% and the S&P500 0.5%. In the currencies the euro closed down 0.3% against the dollar and 0.7% versus the yen; the DXY finished up 0.2%.
Data from China and other Asian centres overnight has given rise to speculation the People’s Bank and central banks globally will have to undertake additional stimulus measures. China’s economic grew by 7.6% in the second quarter, less than the forecast 7.7%, similarly Singapore saw its GDP shrink 1.1%. Other data has shown a slightly slowing of Chinese Industrial Production (from 9.6% to 9.5%) and Retail Sales (13.7% from 13.8%); Japanese Industrial Production was revised down from -3.1% to -3.4%.
Equities have rallied in response to the stimulus speculation; the Nikkei was up 0.2% and the MSCI Asia Pacific Index 1.2% at the time of writing. Meanwhile the currencies have seen a flat start with the Dollar Index little changed.
Data across the rest of today includes UK Leading Index, US PPI and Preliminary Inflation Expectations & Consumer Sentiment.
Gold and silver have seen a muted start so far with gold held to a $7 range. The PGMs edged higher in Asia but has since drifted into negative territory in early Europe. For the timebeing we expect the metals to hold ground within the recent ranges, but so far the recent dips have failed to entice any significant investment inflows; US Mint Eagle data so far point to sales totalling 33Kozs gold and 1.8Mozs silver this month compared with 60Kozs gold and 2.85Mozs silver last month. But, barring any surprise indications of QE3 by the Fed we expect investment flows to continue towards the dollar and US treasuries, keeping the metals under pressure as they test back towards key support levels; could today be break-out day, it is Friday the 13th after all.