The 10-year Treasury yield is up another three basis points to 1.73%, its highest level since the start of the summer. On the short end, futures traders have priced in about a 90% chance of a rate hike between now and year-end.
Tomorrow morning brings September's jobs report and it seems only a string of terribly weak prints would be enough to push the Fed off of its promise to raise rates this year.
Gold is lower by another 1% to $1,255 per ounce - now off nearly $100 per ounce over the past couple of weeks. GLD -1%
Silver today is down 2.25% to $17.30 per ounce - almost $3 per ounce less than its level of two weeks ago. SLV -2.7%
Gold prices tumbled to their sharpest single-session loss since March 2015, based on most-active contracts, as investors turned more optimistic on the global economy after stock markets rallied and the European Central Bank said it stood ready to boost stimulus measures if needed.
Adding to gold's decline was a report from Goldman Sachs commodities chief Jeffrey Currie, who said it is time to bet against the traditional safe haven as investor fears are overdone and do not justify the recent rally.
"On net, fears around China, oil and negative interest rates have likely been overstated in the gold price and other financial markets," Currie says, doubling down on an earlier prediction that gold will slump to $1,100/oz. in three months and $1,000/oz. in 12 months.
The month isn't over yet, and outflows from precious metals ETFS have already topped $1B, according to Bloomberg. The funds haven't seen net outflows for a full month since July (when they lost $1.6B). Net inflows from August to September were a relative trickle.
Unsurprisingly, the outflows have occurred amid a promise of tighter monetary policy, a stronger dollar, and a sizable decline in the price of gold.
It's not just the yellow metal: Platinum futures are down for 12 straight sessions - their longest losing streak since 2002. Palladium prices fell 12% last week, the largest weekly decline in four years. Sliver has been in the red for four straight weeks.
PowerShares (NYSE:IVZ) temporarily suspended creations yesterday while taking over full management of the funds from partner Deutsche Asset & Wealth Management.
With creations allowed again, the funds are no longer susceptible to big premiums such as those seen in closed-end funds, writes Chris Dietrich. Still watch closely, at least for today. PowerShares: "It is possible that the market value of the funds’ shares may be affected by the resumption of issuances of shares of the funds, and the market value may be higher or lower than the intraday indicative value of the shares.":
The move comes as PowerShares (a unit of IVZ) takes over management of the funds from what had been a joint arrangement with Deutsche Asset & Wealth Management.
PowerShares: "There may be increases in the spread they quote between offers to buy and sell shares ... In addition, there could be a significant variation between the market price at which shares are traded and the shares’ net asset value ... Invesco believes that any potential impact to the market in shares of the funds will not extend beyond the time of the suspension.”
Unable to sustain a move over $1,300 per ounce after last week's QE launch by the ECB, gold is selling off hard today, -2.5% to $1,253.
The longs sound stretched, with State Street's Dave Mazza noting gold ETPs had their best inflows in a year last week, futures volume was 52% higher than the average volume over the previous 100 days, and net-long positions in futures contracts increased 27% over the previous week.
"Gross longs are now at their highest since November 2012," says Mazza.
Gold remains higher by just over 4% YTD.
Silver is down 7% on the session to $16.80, platinum by 3.5% and palladium by 3.2%.
One day after the Fed ends QE and focus turns to a rate cut, precious metals are lit up bright red, led by a 4.8% decline in silver (NYSEARCA:SLV) to $16.44 per ounce. Gold (NYSEARCA:GLD) is down 2.15% and back below $1,200 per ounce.
WTI crude oil (NYSEARCA:USO) is down 1.1% to $81.32 per barrel. Bucking the trend lower is natural gas (NYSEARCA:UNG), up 2.4% to $3.81.
Bank of America has one of the more hawkish takes on the FOMC statement from yesterday, and continues to believe the Fed will push through its first rate hike in June, though the market has moved to pricing in tightening a few months later.
No investment sector benefited more today from the dovish take on the FOMC meeting minutes than precious metals miners, as the Fed's worries over weakening world economies and a strong U.S. dollar offer hope for gold bulls that the Fed will not rush to raise interest rates.
Gold mining ETFs surged past those linked to the commodity price, with GDX +7.4% and GDXJ +9.6% while GLD +1%; among leveraged ETFs, NUGT +21.5%.
Gold prices bounce off 15-month lows to reclaim $1,200/oz. as the dollar rally pauses, helping strengthen shares of precious metals miners: AU +4.4%, GFI +3%, IAG +1.9%, BTG +3%, GG +2.2%, NGD +1.5%, KGC +1.6%, AGI +1.6%, RGLD +1%, SLW +2.1%.
Sterne Agee analysts Michael Dudas and Satyadeep Jain foresee gold and silver prices trending higher, with gold averaging $1,400/oz. in 2015 and $1,450 in 2016 and silver averaging $19 next year and $21 in 2016, as “global demand remains firm, liquidity remains ample and the dollar appears overbought.”
With investor sentiment still skeptical, Sterne thinks any supportive macro news flow could provide fuel for a rally; the firm rate Newmont Mining (NEM +1.5%), Agnico-Eagle Mines (AEM +2.4%), Coeur Mining (CDE +1.3%) and Gold Resource (GORO +0.2%) as Buys, with Barrick Gold (ABX +0.5%), Hecla Mining (HL +4.3%) and Pan American Silver (PAAS +1.5%) rated Neutral.
Precious metals miners are broadly lower as gold futures head for their biggest daily drop of 2014, plunging $29.30, or 2.2%, to $1,308.10/oz.
Physical demand has remained short of expectations, Commerzbank's Eugen Weinberg says, and India's decision to maintain a 10% import duty on gold and silver likely will dampen future gold demand expectations from the country.
Barclays, which expects gold to drop to $1,200/oz. by Q3, also expresses caution, saying recent gains across the metals complex look toppy.
Metals continue to lead the way down in commodities following the FOMC results and Yellen press conference. Unless something happens to change the Fed's mind, QE will end this fall and rate hikes are starting about one year from today.
Gold -1.4% to $1,322 per ounce - as recently as Monday, the metal was challenging $1,400. Silver -2.6% to $20.28. Copper -2.2% to $2.92 per pound. Platinum -1% to $1,437 per ounce. Palladium -2.1% to $752. WTI crude oil slips another 0.4% to $98.76.
Gold's retreat over the last couple of sessions has wiped out all of March's gain.
Gold is up 1.8% to $1,262 per ounce and silver 1.9% to $19.49 following the big miss in the ISM report as traders contemplate maybe a slowdown in the taper, and some bulls dream about a QE4. Up 1.5% at the moment the Gold Miners ETF is ahead 12.9% YTD.
The 10-year Treasury yield is off 3 basis points to 2.62% and the December 2016 Eurodollar contract is up 9 basis points to 97.99 - suggesting a slower pace of rate hikes, but still pricing in a Fed Funds rate 175 basis points higher than it is today.
As equities open in a broad-based decline, precious metals miners show early strength: ABX +4.1%, NG +4.1%, EXK +3.7%, GG +3.7%, IAG +3.3%, SA +2.9%, AG +2.8%, SSRI +3.1%, AUY +2.7%, GOLD +2.5%, NEM +2.3%, MVG +2.3%, SLW +2.2%, PAAS +2.2%, AU +2.1%, KGC +2.2% (Briefing.com).