Gold Weaker on Lack of Fresh, Bullish Fundamental News
London (Jan 16) Comex gold prices are slightly lower in early U.S. trading Thursday. The precious metals bulls are awaiting fresh, positive fundamental news, which has been scarce this week. Solid gains in the US dollar index Wednesday have also prompted a bit of follow-through selling pressure in gold and silver markets Thursday morning. February gold was last down $1.50 at $1,236.80 an ounce. Spot gold was last quoted down $5.50 at $1237.00. March Comex silver last traded down $0.104 at $20.03 an ounce.
The feature of the market place this week is the U.S. stock indexes that have either hit or are moving in on new record or multi-year highs. Some mostly upbeat U.S. economic data this week has cheered the stock market bulls. The bullish ways of the U.S. and other world stock markets are working against many other competing asset classes, including precious metals and other raw commodities. Until the air starts to come out of the in-my-opinion presently overly inflated stock market balloon, raw commodities will continue to languish at best. Also, it’s important to remember that major bull runs in markets tend to be stronger and last longer than most market participants ever expect. The same is true with bear markets.
In overnight news, China’s so-called beige book quarterly survey of banks and businesses showed loans to consumers and businesses were hard to come by and that many loans were made to extend current loans. “Credit transmission is broken,” concluded the survey. While the Chinese economy continues to chug along at a healthy clip, the credit situation in China could become very problematic in a hurry. With the world economies and financial systems now being so closely inter-connected, any serious credit problems in China could quickly become a worldwide contagion.
It was also reported Thursday that the Euro zone’s consumer inflation rate was up 0.3% in November from October and were up 0.8% on the year. These figures are well below the 2.0% inflation rate the European Central Bank has targeted as being optimal. Still, German Bundesbank President Jens Weidmann said Thursday he sees only a slight chance for deflationary pressures to envelop the European Union.
U.S. economic data due out Thursday includes the weekly jobless claims report, real earnings, the consumer price index, the Philadelphia Fed business survey, the NAHB housing market index, and Treasury international capital flow data.
