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Thursday, April 16, 2015

Precious metals settle 0.7% higher

Gold reclaims the $1,200-an-ounce level 


Bullion prices finished higher on Wednesday, 15 April 2015 recouping some of the losses they suffered over the past two trading sessions to reclaim the $1,200-an-ounce level. U.S. economic reports came in weaker than expected, which helped weaken the U.S. dollar making gold more appealing to investors. 

Gold for June delivery tacked on $8.70, or 0.7%, to settle at $1,201.30 an ounce on Comex, a day after marking its lowest closing level of the month. 

May silver also settled up 11.8 cents, or 0.7%, to $16.279 an ounce. 

U.S. data released Wednesday showed that industrial production in March fell by a seasonally adjusted 0.6% — down a bit more than expected and the largest decline since August 2012. The Empire State manufacturing index in April fell to negative 1.2— the lowest since December. 

Against that backdrop, the ICE U.S. dollar index traded lower, helping to lift demand for dollar-denominated gold. 

Recent uneven U.S. economic data falls into the camp favoring a U.S. interest rate rise later rather than sooner. Still, many believe the Federal Reserve will make its move to raise interest rates in June. Economic reports the next six weeks could well tip the Fed's hand on when it will make its rate-hike move. Traders were awaiting the Federal Reserve's beige book, due out Wednesday afternoon. 

The other key “outside market” saw crude oil prices solidly higher and hitting a 10-week high today. Today's rally in crude oil was also a positive development for the precious metals bulls. If crude oil bottoms out, it will be much easier for other raw commodity markets to start to trend higher, too. 

In overnight news, China's first-quarter gross domestic product was reported at up 7.0%, year-on-year, for the slowest rate of growth in six years. The figure was in line with market expectations. Asian stock markets sold off on the China news. The slowing rate of economic growth in China is leading to growing notions that China's central bank will continue to stimulate its monetary policy. However, the specter of forthcoming monetary policy stimulus by China's central bank means better demand for commodities is on the horizon. 

The German government auctioned 10-year bonds on Wednesday and they fetched an average yield of 0.13%, which is a record low and suggests there is still flagging confidence in the European Union economy and financial system.
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