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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.
The morning after: Stock index futures are about flat after yesterday's post Fed, post-taper initiation moonshot.
Europe's ahead around 1.5% and the Nikkei gained 1.7% overnight, though Shanghai and Hong Kong each fell about 1%.
The 10-year Treasury yield remains near its highest level of the year at 2.9%, and precious metals - which fell following the Fed announcement - accelerate that decline. Gold is off 2.4% to $1,205 per ounce. Silver - 3.7% to $19.33.
The 10-year Treasury yield jumps to 2.92% following the jobs numbers beat and the far bigger-than-expected dip in the unemployment rate to just 7%. The government shutdown apparently affected this month's speed of decline in the UE rate, but not the level - i.e., it would be at 7% no matter the shutdown, but the furlough and then return of workers caused all of the decline to occur in the November report.
Stock index futures remain about where they were, the S&P 500 (SPY) +0.5%.
Gold (GLD) is off 1.25% to $1,216 per ounce and the dollar jumps, with UUP +0.5% premarket.
Threatening to sink below $1,200 ounce after the strong ADP jobs report this morning, gold has staged a big reversal to $1,247. Below $19 earlier, silver has also come along for the ride, now at $19.72.
The "struggle for gold not only rests with the predominant selling interest among investors currently, but with limited positive catalysts looking forward, gold is unlikely to regain its former appeal," writes UBS, slashing its precious metals forecasts for 2014 - gold to $1,200 from $1,325 and silver to $21 from $24.
With the downward momentum building, gold could test $1,050 an ounce - a level that might approach a "decent buying level," writes the team, but the path would be "very turbulent."
Gold is flat in morning action at $1,223 after yesterday's plunge, while silver has given up a bit more ground, -0.5% to $19.93.
November's PMI read of 57.3 is up from 56.4 last month, and the highest print this year. Leading is a 3 point gain in New Orders to 63.6 and a 2 point gain in Production to 62.8. Supplier Deliveries curiously fell 1.5 points to 53.2 (drones?).
Russia and South Africa, which together hold ~80% of the world’s platinum-group metal reserves, reportedly plan to create an OPEC-type cartel to coordinate exports. Like OPEC, the two countries would want to be able to create a floor under platinum prices, which would help their important domestic mining industries in terms of profitability and allow them to pay poor and increasingly militant miners better wages.
Counting on the Fed's dovish bias to win out, UBS goes against the grain by predicting a "major gold rally" this year, expecting the Fed to continue printing into Q3 when UBS' commodity strategists - in contrast to its economists - expect global growth to lose momentum. But investors have been dumping their gold ETF holdings in favor of industrial metals; last week, physical palladium ETFs saw their largest inflows ever.
A look beneath the hood of Schwab's (SCHW) recently unveiled lineup of 105 commission-free ETFs shows an impressive breadth of asset class coverage, including currency, physical metals and equal-weight sector ETFs not previously available for commission-free trading. Notably absent: iShares single country funds, 10 of which are available among the 101 ETFs TD Ameritrade (AMTD) offers commission-free.
Platinum futures take a breather after a report that Lonmin workers in South Africa have accepted the company's pay offer and will return to work. Prices in the past 30 trading days have climbed from under $1,500/oz. to above $1,700 before a sudden drop today took prices below $1,620 from over $1,670.
Credit Suisse raises its outlook for gold and silver, while slashing its view for platinum metals. 2012 forecast: Gold +19% to $1,850; Silver +12% to $34; Platinum -9% to $1,775; Palladium -23% to $771.
Gold and oil catch bids, but traders are using the events in Libya as an excuse to sell commodity markets, many of which have had remarkable runs. The grains and cotton are particularly hard hit. CORN -3.6%. JJG -3.0%. BAL -4.1%. JJC -1.8%.
Unconcerned that China and India are tightening monetary policy, Jim Rogers sees commodities as a win/win investment. “If the world economy gets better, commodities are going to make a fortune. If the world economy does not get better, commodities are the place to be because they are going to print more money."
Macroman notes that Shanghai has fallen below its 200 day moving average and considers the worrying implications for commodities, whose fortunes have tracked Chinese shares. A divergence in performance, starting in mid-November, has widened significantly.