Gold slumps, tech tumbles
The US released several economic announcements today and the bulk of which were well received, and that added to the view the Federal Reserve will stick to their course of hiking interest rates at an aggressive pace. The initial jobless claims report was 213,000, down from 222,000 and it beat the 227,000 forecast. The New York Fed manufacturing index was -1.5, which was a huge improvement in the -31 seen in the previous month, it easily topped the -13 forecast too. Retail sales grew by 0.3% in August. It is encouraging to see that US consumers are happy to go out and spend money as it is needed to keep the economy ticking along. Bond yields edged up, in fact the 10-year yield hit 3.45%, and keep in mind when it reached 3.48% in June, that was an 11-year high. It is the same old story with stocks, the nudge higher in yields has hit the tech sector, the NASDAQ 100 briefly traded at a two-month low. Eurozone stock markets closed down on the day although their losses are not as bad as those seen over in the US.
Gold dropped below the $1,670 mark as a combination of the stronger US dollar and rising yields hit the metal. Over the years, gold has traditionally benefitted from the flight-to-quality play, but lately, so has the US dollar, and the strong inverse relationship between the greenback and gold is hurting the yellow metal. Gold traded at a level last seen in April 2020. The US dollar is fractionally higher this afternoon and as a result, GBP/USD is below 1.1500, and EUR/USD is still sub parity. The wider risk-off attitude of the last few hours has hit silver and copper, the industrial metals are weaker due to demand worries. Oil has witnessed a big change in sentiment in the past 24 hours, as yesterday it was riding high following the IEA’s increase to demand forecast, while today’s the energy contracts are handing back those gains.