Markets are closed in Europe and the US today, as traders enjoy the last day of the three-day Christmas weekend. Not only are stocks and bonds spending another day at Friday’s closing prices, so are precious metals.
Gold and bonds took advantage of a slightly weaker dollar Friday to book modest gains, as year-end book squaring is drawing energy out of the Trump Rally in the stock market.
February gold futures gained $2.90 Friday, but it wasn’t enough to end the week on the upside. Gold futures were down 0.3% for the week ending December 23rd, to extend the weekly losing streak in futures to seven. Spot gold gained a dollar more than paper gold on Friday, closing $3.90 higher at $1132.20. This was near the midpoint of the day’s trading range.
COMEX silver wasn’t as lucky as gold, as the March futures lost 11 cents to settle at $15.76 an ounce. The 0.7% drop extended weekly losses for the argent metal to 2.4%, it’s second down week. Spot silver lost seven cents, closing at $15.68, down from a session high of $15.90.
Don’t let the price action of recent weeks get you down. Precious metals are still being buoyed by the huge gains from the first quarter. Gold is still looking at its best year in four, up by 6%. Silver is still up 14% for the year, with only four trading days left in 2016. There’s only three trading days left in Europe, as the London Bullion Market remains closed tomorrow.
In other markets, crude futures ended a few cents higher to head into the Christmas weekend, to mark a 52-week high. Prices had trended lower throughout the day, weighed by news that Libya expected to pump 270,000 barrels more a day by March. The provisional government has been working to repair oil infrastructure that has been severely damaged by the five-year civil war that erupted after the government of dictator Muammar Gaddafi was overthrown in October 2011. Libya has been exempted from the recent production freeze agreement by OPEC and key non-OPEC oil nations.
In other bad news for OPEC, Baker Hughes reported that the number of active oil rigs in the US climbed by 13 to hit a 2016 high of 523 rigs. More fracking operations that were mothballed when oil prices plunged to $40 a barrel are once again profitable since prices have gained $10 a barrel.
Despite all the bad news, prices of oil futures manage to barely squeak into positive territory just minutes before the close. West Texas Intermediate contracts settled seven cents higher at $53.02 a barrel — a 17-month high. Brent crude futures settled 11 cents higher, at $55.16 a barrel.
Stocks also ended Friday with minuscule gains. The Dow gained 15 points to close at 19.933.94, in another attempt to get within striking distance of the extremely important psychological 20,000 mark. The S&P 500 also gained 0.1%, closing less that 3 points higher. The Nasdaq gained a bit more than 15 points, to end the day 0.3% higher.
Some of the same things that are affecting gold prices recently are troubling the stock market as well. Namely, the big post-election rally in the dollar. Not only does a stronger dollar make it more expensive for foreign buyers of gold, but a stronger dollar also suppress US exports for the same reason.
Dollar bulls may be pausing for the holidays, however. After hitting a 14-year high of 103.57 on Tuesday, the DXY dollar index has slowly leaked lower. The dollar is once again trending just below unchanged this morning, having lost its grip on the 103 level overnight.
Bond prices were higher Friday, on safe haven plays. The terror attack in Berlin and the fact that the suspect made it through German police dragnets all the way to Italy before being killed in a shootout with Italian police near Milan has thrown serious doubts on the ability of German intelligence services to stop further attacks. On the other side of the world, Australian authorities announced that they had stopped a terror attack there.
On top of these concerns, China and the US continue to face off over Beijing’s artificial islands in the South China Sea. The yield on 10-year Treasury notes fell for the first time on a weekly basis since the November presidential election Friday on these geopolitical fears. The 10-year T-note ended the week 5.8 basis points lower Friday, to 2.542%. The yield on the 30-year note dropped 7.1 basis points to record the largest one-week drop in exactly three months.
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