Spot Gold Trades Above Support

May 19th, 2017 by

Friday morning saw the precious metals claw back some of ground that was ceded on Thursday due to profit-taking. Spot gold traded about $6 per ounce higher (+0.5%) to hover around $1,253/oz. Spot silver was 23¢ higher (+1.4%) to trade at $16.80/oz.

Meanwhile, platinum gained 1% to return to $940/oz and palladium was slightly higher at $763/oz.

Taking Profits Off the Table

Here are Thursday’s closing numbers for the precious metals:

Au: $1,246.80/oz (-$14.10, -1.12%)
Ag: $16.56/oz (-31¢, -1.81%)
Pt: $931/oz (-$13, -1.38%)
Pd: $760/oz (-$20, -2.56%)

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Prices fell sharply across the board, though this was hardly surprising given the strong rally the metals had enjoyed the previous several trading days. Gold gave back a portion of its previous gains, yet this back-and-forth does indicate healthy trading activity. The bout of profit-taking by traders who were cashing in on Wednesday’s gains has revealed a fairly robust support line at the $1,250/oz level for gold.

Friday also saw a similar narrative play out on Wall St, which was in the process of rebounding from significant losses earlier in the week. U.S. indices were about 0.5% higher in early trading.

The President Goes Abroad

President Trump is embarking on a diplomatic trip abroad to meet with various world leaders for the first time since taking office. The excursion couldn’t come at a better time for the president, as the White House has been in constant turmoil since Trump sacked FBI Director Comey, creating the appearance of obstructing the Bureau’s probe into the campaign’s Russian connections. On his trip, Trump will be meeting with several heavy hitters in geopolitics, the new French President Macron; the Saudi King Salman; Pope Francis; as well as other leaders across Europe and the Middle East en route to a NATO gathering. He will be joined by a number of his key staff on the eight-day trip.

Amid the unfolding controversy, demand for government bonds has skyrocketed. The 10-year Treasury yield has tumbled to just 2.24% while the U.S. dollar has continued to lose ground. The greenback traded more than 0.6% lower on Friday, registering at just 97.25 on the DXY index, its lowest in more than six months. This has primarily benefited the British pound, Japanese yen, and the euro. In recent weeks, the Chinese government has also been doing its best to boost the yuan higher. The currency is trading at more than a three-week high. Stock indices around the globe were already in positive territory virtually across the board on Friday.

Elsewhere around the world, political crisis is once again unfolding in Brazil as the country’s president has been linked to corrupt dealings with the country’s legislators. If President Temer is indeed ousted for these connections to corruption (a persistent problem in Brazil), it will be the second presidential impeachment in under a year for the country. Elsewhere in South America, the bankrupt socialist government of Venezuela is finding it increasingly difficult to manage a constant stream of anti-government protests as citizens demand food and access to other necessities. The situation has long since grown into a humanitarian crisis.

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In Iran, the results of national elections are expected to be finalized today. Observers have been following the election closely, as the top leadership position comes down to a choice between the incumbent Rouhani, who supports greater dialogue and engagement with the West, and his opponent Ebrahim Raisi, a religious leader with a more hard-line stance toward Europe and North America.

 

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.