Gold Closed Below 1200, Crude Oil And The USD Rallied
London (Dec 20) Gold price broke below US$ 1200 for the 1st time since June, as the USD soared after Fed’s tapering directives were announced.
Thursday the benchmark COMEX contract dove -3.21% and settled at 1195.3.
Crude Oil prices rallied despite disappointing US data with the front month WTI Crude Oil contract rising to a 2-month high at 99.49 before finishing at 99.04, +1.26%.
The Brent Crude Oil contract finished +0.60% on the day.
Wall Street finished mixed with the DJIA rising to a record high and gaining +0.07% on the day, the S&P 500 index slipped -0.06%, and the NAS finished at 4058.13, – 11.93.
NAS +34.1% YTD, Russell 2000 +32.7% YTD, S&P 500 +26.9% YTD, DJIA +23.5% YTD
While Fed’s announcement to unwind the stimulus measures might result in a tighten financial conditions, participants believed that the decision indicates the central bank’s confidence that the US economy would continue to expand.
Crude Oil prices gained amid expectations that steady economic growth would lift oil demand. The rally was a result of a US report recording a 2nd straight week of inventory contraction and production outage in Libya and South Sudan.
Despite the abundant Crude Oil reserves, Libya had to increase fuel imports as its refinery runs at only 50% capacity due to labor strikes.
The country’s exports also dropped to 110-K BPD from over 1-M BPD in July.
Political unrest in South Sudan also raised concerns over Crude Oil supplies. The fighting threatens to spill from the Capital to the Oil fields, putting the operations at risks. South Sudan is estimated to have daily Crude Oil production of about 200-K BPD.
The US economy dataflow was disappointing.
Initial jobless claims surprisingly increased to 379-K in the week ended 14 December , compared with market expectations of a drop to 332-K. Claims in the prior week were revised higher by +1-K to 369-K, the highest number since March.
Note: the jobless claims data has continued to display an erratic pattern. The rise last week was probably due to statistical noise such as the approach of festive season and cold weather.
Similar pattern was also seen during the same period last year. The 4-wk average rose +13-K to 344-K, compared to 339-K during the November employment survey period.
Continuing claims were +94-K to 2 884-K in the week ended 7 December.
Separately, Existing home sales declined to 4.9-M in November from 5.12-M a month ago.
On a positive tone, the Philly Fed survey climbed +0.5 pts to 7 in December.
For Friday:
The BOJ announced to keep the monetary policy unchanged.
Japan’s economic outlook, the central bank acknowledged that the country’s “economy is recovering moderately” and is “expected to continue a moderate recovery as a trend, while being affected by an increase and subsequent fall in demand prior to and after the consumption tax hike”.
The final reading of US GDP for Q-3 of Y 2013 likely stayed unchanged at an annualized growth of +3.6%.
