Gold prices are trending just below unchanged this morning, after dropping $9.40 yesterday to return prices to the $1,279 range. Geopolitical tensions over North Korea and a surprise call for elections in the UK helped gold test the $1,290 mark again earlier this week. Gold bulls were unable to push prices beyond that resistance level, and an easing of safe haven demand let gold fall back into its previous channel of $1,279 – $1,283.
Precious metals are mixed this morning, as spot silver prices were hit by sudden large selling pressure this morning, perhaps a large player looking to force prices to the point where their previously placed bets pay off. This has pushed the “poor man’s gold” down to test the support line at $18 an ounce.
The PGMs are showing strength, with palladium resuming its upward trajectory after a bad string of losses last week. Spot palladium is up over $20 an ounce in early New York trading, after closing $5 higher yesterday, making a run to regain the $800 mark. That may prove a bridge too far for one day’s movement, as the grey metal is already 2.5% higher this morning at $796 an ounce. Platinum prices are $10 higher, wiping out yesterday’s losses and looking to snap a two-day skid.
Modest gains for the US dollar yesterday put pressure on commodities that were previously riding the greenback’s slide earlier this week. The DXY dollar index rose 0.3% yesterday, but was unable to struggle over the 100 mark. It has given back those gains this morning early in the US trading session to fall back near three-week lows. However, other forces are at work keeping commodity price action subdued for the most part.
Stocks on Wall St opened higher this morning, after blue chips were hit hard for a second day in a row Wednesday. Tuesday, it was unexpectedly weak earnings from Goldman Sachs, which pushed the Dow down by 70 points by itself and was the major contributor to a 113 point drop in the index. Yesterday, it was IBM’s turn to be an anchor around the Dow’s neck, pulling the index 57 points lower in a 118 point loss.
A drop in oil prices yesterday not only drug the Dow lower, but also the S&P 500. The wider index lost 4 points to close 0.2% lower, at 2338.17. The Nasdaq closed 13 points higher Wednesday, more than wiping out a 7 point loss on Tuesday.
Those oil prices saw the largest one-day loss in six weeks, as a surprise 1.5 million barrel build in US gasoline supplies outweighed a 1 million barrel drop in crude stockpiles. A glut of gasoline means lower demand for crude from refineries, who will be cutting back on gas production. News from the US Energy Information Administration that the shale fields are still ramping up production added to the negative sentiment among oil traders. Total crude production in the US rose 17,000 barrels a day over the last week.
May West Texas Intermediate contracts, which expire at today’s close, fell 3.8% yesterday to settle at $50.44 a barrel. June Brent futures did no better, losing 3.6% to end the day at $52.93 a barrel. This was the worst one-day loss for oil since March 8th.
The easing of international tensions that affected gold prices yesterday was also reflected in the bond market. Yields on the benchmark 10-year Treasury note are higher today, after ending at 2.21% yesterday. Safe haven demand saw yield fall as far 2.165% on Tuesday.
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