Gold is trading at its Thursday highs this morning, bucking headwinds from a moderately higher dollar. Stocks opened lower this morning, as the market seems exhausted from its recent record-setting rally. The precious metals are seeing some safe-haven demand out of Europe today, as the possibility of the far-right politician Marine Le Pen’s chances of winning the French presidential election seem to be growing.
Gold prices were flat at $1,238.50/oz by 10:30 am EST while spot silver trended about 0.5% lower to a shade below $18/oz. The Platinum Group Metals (platinum and palladium) were further in the red, falling to $1,000/oz and $790/oz, respectively.
Friday was relatively quiet on the markets as a whole as equities seemed to backpedal into the end of the week. Global indices in Asia were down overnight, with Shanghai losing 0.85% and Japan’s Nikkei 225 trending about 0.6% lower. The European markets were also in negative territory during trading on Friday, with France’s CAC 40 leading the way, down 0.8%. The worry about Le Pen and the National Front winning the French presidency is somewhat mirroring the anxieties that accompanied the Brexit referendum and the U.S. presidential election. Wall St opened below unchanged before the Nasdaq began to poke back into the green.
The fact that the current rally in stocks is facing resistance should be a sign to traders that momentum may be swinging in the financial markets. After riding a wave of positive sentiment from recent economic reports, hawkish comments from Federal Reserve Board members, and continued executive action by the Trump administration, there finally seems to be some profit-taking in equities. The flight from stocks has naturally led to some buying on the Treasury market, sending 10-year yields lower to 2.41%.
The euro gave up about up 0.4% against the USD to slightly above $1.06, its weakest in five weeks. The yen actually gained about 0.4% against the dollar, while the British pound sterling dropped by 0.5%.
A slightly stronger dollar put a damper on the commodities sector in general. The greenback rose about 0.35% to 100.8 on the DXY index. This placed a drag not only on precious metal prices but also on commodities broadly. Crude oil prices lost between 0.3% and 0.6% while copper futures, one of the big winners of late, slid by 0.6%.
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