Another Record High for Gold

August 22, 2011

Gold prices are up 1.7% on balance after spiking earlier to $1894.80.  At the high, such was 19.4% above its level on July 21.  Strong gains were also registered in other precious metal prices overnight.

The data calendar today is very thin.  Markets are calm so far.  Weekend press was filled with speculation about a coming U.S. and global recession.  Bernanke’s speech on Friday at the Jackson Hole Symposium looms heavily.  German Chancellor Merkel reiterated her opposition to euro bonds.  The German Finance Ministry projected continuing slower growth in 2H11, but Finance Minister Schaeuble defended the euro, calling such stable.

Victory for Libyan rebels in Tripoli appears almost complete.  Two sons of Qadhafi have been taken into custody.

Stocks were mixed.  Bottom fishing lifted the Paris Cac and British Ftse by 1.7%, and the German Dax recovered 0.5%.  But in the Pacific Rim, share prices fell by 1.8% in South Korea, 1.1% in China, 1.0% in Japna, 0.8% in Malaysia, 0.4% in Taiwan and Thailand, and 0.5% in Australia.  Equities in Hong Kong rose 0.5%.

The dollar is unchanged against the euro and Swissie, up 0.4% relative to the yen, but down against commodity-sensitive currencies.  The Canadian and Australian dollars advanced 0.4%, and the kiwi climbed 0.7%.  The dollar edged 0.1% higher against the yuan and is 0.1% softer against sterling.

Ten-year British gilt and Japanese JGB yields are unchanged.  German bunds firmed two basis points.

Oil prices rebounded 0.7%.

Japanese supermarket sales in July were 2.1% higher than a year earlier.  Department store sales were 0.1% below their July 2010 level.

Thai GDP contracted 0.2% last quarter, trimming on-year growth to 2.6% from 3.2% in the year to 1Q11.  Quarterly growth in 1Q had amounted to 2.0%.  Exports, consumption, government spending, and business investment each posted less on-year growth in 2Q than in 1Q.

Hong Kong CPI inflation accelerated to 7.9% last month from 5.6% in June.  Taiwan had an as-expected 4.4% jobless rate in July.

Swiss on-year M3 and M1 money growth accelerated in July to 5.9% and 5.2% from 4.9% and 4.4% in June.

Hungarian business sentiment worsened 4.4 points to minus 11.3 in August, while consumer confidence recovered 1.3 points to a still-depressed 40.7.

Dutch consumer spending registered a negative 0.9% on-year change in July.

The Chicago Fed national manufacturing index gets released today.  Last Thursday’s shocking Philly Fed report that saw that index slump by 33.9 points and across an apparent recessionary threshold to minus 30.7 provided critical impetus to heavy flows out of stocks and into bonds and precious metals.  Preliminary purchasing manager survey results for Euroland, Germany, France and China arrive Tuesday.  In the meantime, today’s focus will be on stocks in North America.  During the last four calendar weeks, while the 10-year Treasury yield was falling 90 basis points, the DJIA plunged 4.3% in the week to July 29, 5.7% in the week to August 5, 1.5% in the week to August 12, and 4.0% last week. 

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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