Precious Metals Down While Stocks Rally

February 13th, 2017 by

Gold, silver, and the precious metals were all down modestly when markets opened in New York on Monday. Global equities rallied virtually across the board, with stocks in Europe trading solidly in the green: Germany’s DAX rose 1.1%, France’s CAC 40 gained 1.5%, and the EURO STOXX 50 added 1.2%. Asian shares closed up overnight, with the Shanghai Composite rising 0.63%. Wall St followed the rest of the world’s indices higher, opening up about 0.4%.

By 10 am EST, spot gold lost about 0.8% while spot silver shed 13¢, or about 0.7%, sending the metals to $1,222/oz and $17.80/oz, respectively. Platinum prices fell about 1.6%, trading shy of $1,000/oz. Palladium lost roughly 1% but has still been literally a hot commodity so far in 2017, rising over 13% year-to-date.

Trump Trade Returns?

chase for yield

The renewed optimism about stocks and the global economy in general seems to be coinciding with a reprisal of the “Trump trade.” Market sentiment does seem to be calming down and accepting the new normal of the Trump administration with less alarm. Translation: traders, investors, and firms are willing to tolerate more risk (with the expectation of higher returns). The White House’s ambitious tax reform agenda and continued rollback of Obama era regulations are being taken as bullish developments.

Nonetheless, Treasurys are still rising on sporadic safe-haven demand. This is despite reports that the Bank of Japan, one of the two largest holders of U.S. debt in the world (along with China), has been dumping Treasurys at the fastest pace in almost four years. The 10-year note fell on Monday morning, hitting 2.42% after being as high as 2.61% earlier this year. The dollar was just a squeak higher at 100.9 on the DXY index.

watching-yellen

Tomorrow, Fed Chair Janet Yellen will testify before the Senate Banking Committee. It’s not clear whether the Republican majority in Congress will seek to increase oversight of the central bank—or, conversely, entrust the Fed with even greater independence.

Here are the closing numbers from Friday, February 10:

 

DXY: 100.73 (+0.08, +0.08%)

10-yr T-note: 2.408% (-⅛, -0.82%)

 

DJIA: 20,269.37 (+96.97, +0.48%)

S&P 500: 2,316.10 (+8.23, +0.36%)

Nasdaq: 5,734.13 (+18.95, +0.33%)

 

Commodities

First, Friday’s closing numbers for the precious metals:

 

Gold: $1,232.90/oz (+$5.10, +0.42%)

Silver: $17.94/oz (+$0.32, +1.85%)

Platinum: $1,009/oz (-$4, -0.39%)

Palladium: $783/oz (+$15, +1.95%)

 

The big story in the commodities sector has been copper. A strike at a copper mine in Chile and a freeze on copper exports from Indonesia cut off supplies of the metal from the world’s two largest sources, sending prices soaring to about $2.78 per pound ($6,126 per tonne), the highest levels in more than 18 months. On Friday alone, copper shot up over 4% for its biggest single-day gain in nearly four years.

Friday also saw crude oil prices rally:

 

WTI: $53.85/bbl (+$0.85, +1.60%)

Brent: $56.68/bbl (+$1.05, +1.89%)

 

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.