Gold and Crude End Week On Softness While Equities Fight For Gains

Although the fear-factor index lightened up today, (the oft-cited VIX index on the CBOE), there is quite a bit of uncertainty and therefore volatility stalking the markets.

It seems that even safe havens are not attracting the kind of money we might normally see when equities take a turn down and seem to be overvalued.

The U.S. dollar has been a major factor in gold prices today, earlier on preventing further losses that were generated via regular trading. As we get into mid-to-late-afternoon trading, however, dollar strength is pushing the yellow precious metal down.

Overall, the precious metals complex was a little jagged on the day. At 3:15 in New York, silver was up slightly. Platinum was up almost seven-tenths of a percent. Palladium, however, is down $1.00 per ounce.

Precious metals are not alone as safe havens that are experiencing some strange treatment at the hands of investors.

The yen is being pummeled a bit by the dollar. In its turn, though, the euro is smacking the greenback around.

The euro/dollar pair is very interesting because, except for November of 2015, the two big-dog currencies have traded in a range between 1.08 and 1.14. You can track the correlative oscillations in gold and crude created by the currencies’ movements, although obviously oil has seen a lot of volatility for other reasons in the last 12 months.

We are going to ponder over the weekend and next week whether the recent yen softness is a capitulation of some sort, or at least the beginning of one. Japanese and U.S. interest rates are headed in opposite directions.

While West Texas Intermediate crude is down 0.85% on the session, it is up around 4.00% for the week. Crude traders will continue staring at the psychological ceiling of $50 per barrel. It isn’t a pure technical resistance, however.

We are in a state of permanent downward pressure on oil prices. (As permanent as anything can be, that is.) We have been enumerating the reasons for well over a year now.) Oversupply, efficiencies in delivery systems, more crude in the ground than previously believed, relative tranquility in international affairs and the inexorable rise of alternative/renewable energies have combined to keep the lid on prices.

In spite of the decline in oil today, U.S. equities, like those around the world are up. The U.S. rise can be attributed to significantly solid data concerning existing home sales in April.

The National Association of Realtors reported that existing home sales increased 1.7% to an annual rate of 5.45 million units. A Reuters economists’ poll had forecast home re-sales would rise to a 5.40 million-unit pace in April. Sales were up 6.0% from a year ago.

March's sales were revised slightly higher to 5.36 million units from the previously reported 5.33 million units. However, Reuters noted that there were regional variations. Home sales surged in the Midwest by 12% last month. They also rose in the Northeast, while markets in the South and West weakened.

We’ve been wondering where all the sidelining money had gone.  

Wishing you as always, good trading,