Gold Plunges More than $100/Oz

April 15, 2013

The free-falling price of gold is 7.4% lower than its Friday close and, at $1,389.90, at its weakest level since February 18, 2011.  Oil has plunged 3.5% to $88.13 per ounce, lowest since December.

Commodity-sensitive currencies have been depressed sharply.  The U.S. dollar has risen 1.3%, 1.1% and 0.8% against its New Zealand, Australian and Canadian counterparts.

The yen has strengthened further after last week’s failure to sink through the 100/USD level.  The greenback is 0.9% weaker against the yen but up 0.3% against the euro and 0.2% versus the Swiss franc and sterling. 

Ahead of a G20 meeting of central bank chiefs and finance ministers late this week, the Chinese yuan predictably has firmed 0.2%.

Share prices have dropped slightly more than 1.0% in Germany, Spain, France, Italy, and Great Britain.  Japan’s Nikkei earlier closed down 1.6%.  Stocks also fell by 1.4% in Hong Kong, 1.0% in China, 0.9% in Indonesia and Australia, 0.7% in Taiwan and 0.3% in Singapore.

The 10-year German bund and British gilt yields are unchanged from Friday.  The 10-year Japanese JGB edged up another basis point to 0.63%.

Chinese data reported today are generally weaker than predicted.

  • Real GDP rose 1.6% sequentially in 1Q13 but the on-year advance fell to 7.7% from 7.9% in the fourth quarter of 2012.  Analysts were expecting an 8.0% rise from 1Q12.
  • Industrial production in March was 8.9% greater than a year earlier, the slowest 12-month increase since August and down from 9.9% in the year to February and 10.3% in the year to January.
  • Retail sales rose 12.6% on year in March and by 12.4% on year in 1Q, down from a pace of 14.9% in the final quarter of last year.
  • Fixed asset investment grew 20.9% between the first quarters of 2012 and 2013, less than an expected rise of 21.3%.
  • China’s business climate index improved 1.2 points to a 1Q reading of 125.6 from 124.4 in the final 2012 quarter.

The Bank of Japan conducted a quarterly review of regional economic conditions and found improvement in all nine regions.  Kuroda endorsed the view that the economy is returning to a moderate recovery path.

Japanese industrial production was revised to a rise in February of 0.6% from a dip of 0.1% reported initially.  Output was nonetheless 10.5% lower than in February 2012.  Industrial shipments also were revised much higher to a gain of 1.4% from +0.8% reported at first.  Inventories, down 2.0% on month, fell for the seventh time in a rose.  Capacity increased 0.7% in February and by 2.2% from a year earlier.  Capacity usage was unchanged on month and off 1.3% on year.

In Australia, loans for homes rose 2.0% in February, the first advance since October.  New Zealand’s Performance of Services index dipped 0.1 points to a 55.4 reading in March.  Turkey recorded a 9.4% jobless rate in January.

Wholesale price inflation in India slowed sharply to a 3-year low of 5.96% on year in March from 6.84% in February, spurring speculation that the Reserve Bank of India will soon ease policy. 

Retail sales in Singapore posted a smaller-than-forecast 2.7% decline in the year to February. 

Euroland’s trade position improved in February for a bad reason.  The seasonally adjusted surplus widened from EUR 8.7 billion in January to EUR 12.0 billion in February because of a 2.1% drop in imports.  Exports ticked only 0.1% higher.  The unadjusted EUR 5.6 billion surplus in January-February compares with a EUR 7.9 billion deficit in the first two months of 2012.

Danish producer prices posted a monthly drop of 0.6% in March and a 12-month decline of 0.4% from March 2012.  Finnish CPI inflation held steady at 1.7% in March.  Czech producer price inflation slowed to 1.0% from 1.3% in February.  Dutch retail sales sank 10.3% on month and by 4.8% on year in February.  The Dutch trade surplus narrowed 0.8% on month to EUR 3.79 billion in February.  Norway’s trade surplus widened 12% on month to NOK 37.7 billion in March. 

The Chicago and Minneapolis Fed presidents, Evans and Kocherlakota, made dovish public remarks about monetary policy needs.  Scheduled U.S. economic data for today include the Empire State manufacturing index, the National Home Association of Homebuilders index, and Treasury Department monthly figures on international portfolio investment flows (TIC).  Canadian existing home sales also arrive.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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