The precious metals repeated their morning performance from yesterday on Tuesday, steadily recovering from overnight losses to push gold prices right back at $1,257 per ounce. The yellow metal was up more than $4 after giving up the similar gains the previous day at the end of Monday’s session. Spot silver added 16¢ an ounce (+0.9%) to $18.40/oz on the nose. Platinum and palladium were mostly flat.
The rebound for gold and silver this morning erased the effects of some profit-taking as both metals were still hovering near four-month highs. Gold continues to encounter strong resistance at the $1,260/oz level: it hasn’t breached that level since before the swoon for the metals in the immediate aftermath of the election result in November. Investor sentiment toward gold continues to show good signs, however. Speculative interest in gold futures, driven largely by hedge funds, is now at an 11-week high.
While Wall St was trending below unchanged by 10:30 am in New York, not much activity was expected ahead of the president’s first address of Congress tonight at 9 pm EST—long after markets close in the U.S. The markets will be hanging on President Trump’s every word, seeking clarity on his key policy planks of tax reform, cutting regulations, and expanding spending on infrastructure and the military without cutting entitlements like Medicaid, Medicare, and Social Security. Though the latter initiative may prove an impossible hurdle, the speech will generally signal how aligned congressional Republicans are with the White House’s agenda.
Although an umbrella of optimism has seemingly protected markets from any downward correction so far this year, investors are showing signs of concern behind the scenes. More than anything else, the general feeling of uncertainty drives shareholders crazy. Defensive stocks like big utilities have been the best performers over the past several weeks while tech firms and financials have tumbled.
There are, of course, rumblings about a March rate hike from the Federal Reserve throwing a wrench in the equities rally. The markets are current implying a 50% expected chance for a move by the FOMC in March; in other words, traders are clueless about what the Fed will actually do.
With no clear signals to one side or the other, Tuesday was shaping up as a quiet session for stock indices around the globe. The second (revised) estimate for fourth-quarter GDP in the U.S. came in at 1.9%, providing some modest support for the Dow Jones and S&P 500. The Nasdaq still lagged behind. In other economic news, stronger consumer spending was counterbalanced by a wider trade deficit.
The dollar managed to close just above unchanged on Monday. The greenback traded marginally lower today (100.85) on the DXY index. Meanwhile, the 10-year Treasury yield stood at just 2.36%.
More fuel is being added to the populist fire threatening the stability of the euro (and the EU in general): You can add the Netherlands to the list of European countries whose upcoming elections are expected to elevate a far-right Euroskeptic party into power. Nationalist leader Geert Wilders has made anti-immigrant rhetoric the center of his presidential platform, aligning himself with similar movements in France, Italy, and across the continent. The common currency held at $1.06.
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