Metals Prices Today Get Hammered In US Trading
Precious metals got slammed in US trading after the New York Empire Manufacturing Index showed expansion in the region. Expectations for the Index were at -2.0 and the actual reading was +10.0. The continued positive readings for the global economy have hurt the demand for safe havens. As I said yesterday, gold doesn’t pay dividends and equities do. As the global economy continues to improve, the strength in equities will continue and weakness will be seen in safe havens like gold and bonds.
$1600 Critical For Gold Bugs
The $1600 level in gold needs to hold for gold bugs to have any hope of challenging the all-time highs in gold. Those that are bullish of gold still see it as an undervalued asset and are targeting a price of $1900 to $2000 an ounce this year. That will be difficult to achieve if gold closes below the $1600 level. So far the bulls defended the $1600 level on Friday and the market closed at $1609.50 in New York. The low on Friday was $1596.70 and that price needs to hold next week. The next support level after that is $1550.
US Stocks Rise For 7th Week
The mergers and acquisition activity in the US gave stocks a further boost this past week. Warren Buffett is buying HJ Heinz and signaling to the markets his optimism by putting his cash to work. $40 billion worth of deals were announced this past week. This brings the total for the month of February to $140 billion.
The S&P 500 Index is up 6.6 percent so far this year. The index closed the week at 1519.79, the Dow Jones Industrial Average at 13,981.76, and the NASDAQ at 3,192.03.
Bernanke Says US Economy Still Recovering
Federal Reserve Chairman Ben Bernanke said at the G-20 meeting that the US economy still needs more work. The unemployment rate is almost 8 percent and that he’ll continue with monetary easing until that rate comes down. The Fed is buying almost $85 billion a month in mortgage backed securities and US treasuries to aid the recovery.
Yen Weakens On Expectations G-20 Won’t Criticize Japan
The yen weakened further against its major peers on expectations that nothing will be said by the G-20 regarding Japan’s attempts to weaken its currency and help spur its economy. The Aussie dollar closed the week at 96.284 yen, the US dollar 93.500 yen, and the euro 124.960 yen.
Crude Oil Falls After Failing To Break Through $98
Crude oil keeps running into the brick wall of $98 and traders booked their profits ahead of the long US holiday weekend. US Industrial Production contracted last month and that was all the excuse traders needed to sell. WTI closed at $96.41, down $1.49 and Brent closed at $117.66, down 34 cents.
Data On Tap Next Week In The US
US markets are closed on Monday for the President’s Day holiday. After that, we have data on housing, FOMC minutes, CPI and PPI, Jobless Claims, Philly Fed and Federal Reserve members speaking. Should be an exciting week!
