Gold prices spiked to 3-1/2 month highs this morning, touching the important $1,250/oz level as successive buy stops were triggered. Silver is also trading at a 3-1/2 month high. The dollar was down three-tenths of a percent, as a jump in first-time jobless claims was seen as a bearish factor for the Federal Reserve’s next interest rate hike.
Gold prices have been showing greater strength against headwinds recently, so was primed to spike when those headwinds abated. At 10am, spot gold was $10.70 higher at $1,247.90, and spot silver had gained 18 cents to trade at $18.16 an ounce.
Platinum was trading $7.00 higher at $1,009 and palladium was up $2 an ounce at $770, both retaining the strength that has kept them in the top five best-performing futures year-to-date.
All the “white metals” are over-performing on the futures market this morning, as silver, palladium and platinum occupy the 1-2-3 spots on the YTD charts. Gold futures are in 11th place, “only” 8% ($94 per ounce) higher for the year.
At the same time, stock markets in the U.S. have been continuously climbing so far in 2017, as well. The Dow Jones index has experienced its longest run of record-setting closing marks in three decades. As of Wednesday’s close, the DJIA was up over 13% in the four months since the presidential election.
Similarly, the S&P 500 has advanced almost 6% since the calendar turned to 2017. Both indices were trading higher on Wednesday while the Nasdaq went the other direction, dragged down by slumping energy stocks. Still, the Nasdaq has notched new record highs no less than 19 times since November 8th. In general, Wall St has been responding well to better-than-expected corporate earnings this quarter.
The current atmosphere of hawkishness regarding interest rates created by the Federal Reserve will continue to weigh on the decisions of investors and traders going into the March gathering of the FOMC. With gold prices pushing higher and the Treasury market seeing renewed demand, however, it appears that many market participants aren’t convinced by the Fed’s outward optimism and are protecting themselves with safe havens. 10-year yields on U.S. government debt dipped again, hitting 2.39%.
Yesterday’s FOMC minutes from January did reveal the board members’ concern about a particularly strong dollar. Raising interest rates would likely exacerbate this issue. The committee’s comments about the dollar may help stem the greenback from appreciating too much against other currencies, which would impact U.S. exports and the trade deficit, among other consequences. In other forex news, there’s rumors that the Treasury Department may be preparing to officially label China a “currency manipulator,” which could have serious ramifications for trade and geopolitics.
Crude oil prices joined the precious metals and other commodities in rallying on Thursday. Both the WTI crude and Brent crude price benchmarks were up over 2% during morning trading, pushing the latter up to an even $57 per barrel.
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