The precious metals were all trading in positive territory on Thursday morning even as the stock markets have been rallying this week. Hawkish comments from Fed Chair Janet Yellen have also placed downward pressure on gold, but that hasn’t stopped the yellow metal from stacking up yet another trading day in the green.
Spot gold opened over $7 per ounce higher to $1,240/oz at 9:30 am EST in New York. Spot silver was also about 0.7% higher, trading slightly above the $18/oz mark. Meanwhile, the platinum price was 0.6% higher at $1,015/oz and spot palladium moved above $790/oz.
Don’t Call It a Comeback
You can say it’s a turnaround, a rebound, a comeback—however you would like to describe the action in the gold market on Wednesday. After the stock markets looked to notch yet another day of all-time highs and Yellen piled on comments about imminent rate hikes, gold responded negatively to new economic data in the U.S. during the morning trading session.
Yet, the metals had pulled back onto positive ground by the end of the trading day. The narrative surrounding the economic performance of the U.S. notwithstanding, traders appeared to “smell a rat” in the rally. Momentum aside, the fundamentals simply aren’t there to support the type of market exuberance being seen.
As a result, both equities and the precious metals have been moving in the same direction on Thursday. This has been a surprising theme so far in 2017: gold prices are up over 7% year-to-date while the S&P 500 has also gained 5% YTD. There is still confidence that the Trump administration and the GOP Congress will roll out a very business-friendly tax reform plan in the coming weeks. Nonetheless, the current rally seems to be based more on feelings and hopes that have yet to materialize than anything concrete.
Wall St was higher again in early trading but quickly fell back near unchanged by 10 am EST. After successive record closes, the Dow Jones Industrial Average has settled above 20,600 while the S&P 500 is just shy of 2,350. The Nasdaq, perhaps the hottest of the three indices, is hovering above 5,825. Treasurys have naturally sold off amid the stock rally, sending 10-year yields to 2.48%. The dollar was roughly 0.6% lower on Thursday, as well.
In markets abroad, the Shanghai Composite and the Hang Seng index (Hong Kong) gained 0.5% overnight while the Nikkei 225 in Tokyo lost about the same amount. European shares were about 0.25% in the red in early trading.
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.