Precious Metal Prices Still Steady

February 22nd, 2017 by

The gold price opened mostly flat on Wednesday as the precious metals continue to defy market expectations for a downturn. Spot gold was trading around $1,236/oz early in the session while spot silver gained about 2 cents, remaining just below $18/oz.

Platinum and palladium broke below support, posting modest losses of about 0.5%. The two metals traded at $1,000/oz and $775/oz this morning, respectively.

Against Expectations

Similar to the prevailing belief that the precious metals are bound to lose ground in favor of the stock market rally, the markets would also seem to be signaling that risk-on trading will reduce demand for government bonds. This, however, has not come to fruition, either. In spite of the rally in equities, a great deal of anxiety and uncertainty is still driving money into safe havens like bonds and precious metals. U.S. Treasurys continue to see demand, sending the benchmark 10-year yield lower to 2.40%. This is despite China significantly trimming its Treasury holdings over the past several months, which should place upward pressure on yields.

Wall St opened lower on Wednesday before moving back toward unchanged by around 10:30 am EST. This follows new record-high closing levels for the S&P 500 nine out of the last ten trading sessions. While this certainly speaks to the level of market exuberance right now, this is tempered by the safe-haven trades.

The dollar was just 0.2% higher on Wednesday, holding around 101.5 on the DXY index. This modest action was led in part by a stronger Japanese yen, which is approaching 113¥ per USD. The euro and pound sterling both fell slightly against the greenback.

Housing Rebound

Markets basically shrugged off this morning’s report that existing home sales in the U.S. surged 3.3% in January to their highest levels in a decade. The National Association of Realtors reported that the inventory of available homes decreased for the 20th consecutive month, driving average home prices higher.

Crude oil prices moved lower in early trading along with most of the rest of the commodities sector. WTI crude and Brent crude each lost about 80 cents per barrel, or 1.4%. Industrial metals like copper and nickel also lost ground on the notion of economic slowdown in China, the world’s manufacturing powerhouse.

In the U.S., the main event to keep an eye on is the release of the most recent FOMC meeting minutes later this afternoon at 2 pm EST.

 

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.