Gold On Rampage As Equities Falter

As hopes for a more stable and subdued trading day in equities faded, gold leaped ahead to start the week. In late afternoon, gold is up over $16.

In fact, the whole precious metals complex, reflecting not just the appeal of haven buying but an overall interest in metals for profit, is up heartily. Platinum boomed up over 2.00% on the session.

Equities in Asia began the downward movement overnight. Shanghai fared the worst, down almost 3.00%. Hong Kong and the Nikkei were also down significantly.

Europe escaped the malaise, but just barely. The French CAC and London FTSE were up ever so slightly, while the DAX was down marginally.

U.S. stocks were down across the three major indexes, although not enough to draw strong conclusions. The slides on the Dow, S&P and NADAQ were in the half-percent range.

Weak economic news weighed on American markets.

The Chicago Purchasing Managers Index came in at 47.6 in February, missing expectations and dropping from 55.6 in January.

Pending home sales nationally fell by 2.5% in January against expectations for a slight gain.

One analyst said the equities were “a little tired.” The general view is that we’ve come a good ways fairly fast and people are watching their backs, especially as today was the end of a month.

On Friday, both the Dow and S&P 500 closed above their 50-day moving averages.

We think there is also remaining fear about China. The second-biggest economy in the world cut its bank reserve ratio, an indication credit is still too tight there.

The equities stumble was in spite of the rise in crude oil. West Texas Intermediate settled up 3.00% on the day. Notable was a 5.00% drop in the price of natural gas as a continuing mild winter in the northern hemisphere helps reserves to pile up.

Oil was up on chatter that Saudi Arabia is going to come to the table concerning production and pricing issues that other producing nations have been clamoring for.

On cue, U.S. shale oil producers said they would jump back in the market at $40 to $45 per barrel, a far lower level than their previous “profit point” price of roughly $60 per barrel.

The yield on the U.S. 10-year was down nominally, indicating little interest in the paper as a haven. Why bother when gold is so strong?

Wishing you as always, good trading,