Gold Drifts as Stocks Hit New Highs

November 22nd, 2016 by

Gold prices have slipped below unchanged in New York, giving up modest overnight gains. Industrial metals have resumed their “Trump Rally,” with copper futures hitting prices last seen in July of last year, and iron ore and steel prices rising high enough to trigger limit breakers in Chinese markets.

Spot gold closed Monday at $1,214.00 an ounce, for a gain of $6.60. December gold futures settled marginally higher, gaining $1.10 an ounce to $1,209.80. Spot silver closed flat, logged a one cent gain to end at $16.56. December silver futures fell 10.3 cents to settle at $16.521.

Despite recent pullbacks, gold futures are still up by 13.85% year to date, as of this morning. Silver futures are 19.67% higher year to date.

It seems that the US dollar rally has run out of steam, at least for the time being. Prices have slipped for a second day, as the greenback struggles to retain the 101 mark on the DXY dollar index. The dollar has rallied more than 3% since the November 8th election.

rising-marketsOn Wall St, Monday marked the first day since December 31, 1999 that the Dow Jones Industrial Average, the S&P 500, the Nasdaq Composite, and the Russell 2000 small cap stock index have all closed at record highs on the same day. All four indices are extending those all-time highs this morning, as market predictors are showing a 100% chance of the Federal Reserve raising interest rates in December, for only the second time since the global financial crisis.

The rout in US debt that was sparked by Donald Trump’s election victory finally paused Monday, as the yield on the benchmark 10-year Treasury note ended flat at 2.315%. The 10-year is holding near yesterday’s close, which may be signalling that the bond apocalypse is done for the time being.

The big news in the commodity sector is oil. December Nymex (WTI) crude futures expired at settlement Monday, with the January contract taking over. This new front-running contract closed $1.88 higher, gaining 4.1% to $48.24 a barrel. Meanwhile, January Brent futures gained 4.4% to settled at $48.90 a barrel. This morning finds WTI 14 cents lower, and Brent 12 cents higher to break the $49 mark.

oil-drilling-white-backgroundOil prices are rallying on PR announcements by OPEC that a six-month deal to curb crude production is imminent. All this strife and turmoil may end up being for naught, as US shale operations are already tooling up to fill any gaps. At the anticipated price of $55 a barrel, hundreds of fracking wells will suddenly be profitable again. Baker Hughes reported Friday that the active US oil rig count jumped last week by the largest amount in 16 months. 19 more oil rigs were put into production last week, for a total of 471 rigs.

Due to the Thanksgiving holiday Thursday, US markets will be closed. This is pushing Thursday’s usual economic reports up to Wednesday, giving traders a heavy slate of data to analyze. Not only are producer prices due from Europe, we will get durable goods orders, first-time jobless claims, new home sales, US crude stockpile reports, and consumer sentiment reports, all in addition to producer prices.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product