After trading virtually flat on Monday, the precious metals were each solidly higher on Tuesday morning as prices approached key technical levels. Spot gold was 1% higher when markets opened in New York this morning, crossing above $1,292/oz. This is not far off from gold’s 2017 high of $1,297.40/oz, which was hit back on April 17th.
Silver prices were also on the rise, gaining about 13¢ per ounce to approach $17.75/oz. Platinum and palladium climbed 0.95% each, trading around $960/oz and $850/oz, respectively.
Gold prices, U.S. Treasurys, and the Japanese yen have all been climbing as traditional safe havens in the wake of the terror attacks on Manchester and now London in the space of just a few weeks. The 10-year T-note yield has fallen to just 2.14% while the yen is firmer at ¥109 per dollar. This has further hurt the prospects of the U.S. dollar, which tumbled to a six-month low on the DXY index at just 96.7. Stocks in the U.S. were down slightly on Tuesday, as were equities around most the world’s exchanges.
This followed a quiet session on Monday in which spot gold closed just slightly higher at $1,279.30/oz, a mere 80¢ higher. The rest of the precious metals followed a similar path, with silver ending the day flat at $17.52/oz while platinum and palladium each lost about a dollar. The surge early on Tuesday pushed gold near important technical levels that the yellow metal hasn’t tested in over a month. Gold has climbed better than 7% from its May low of $1,215/oz, which if nothing else reveals that the gold market has been confined to a tight trading range throughout 2017. If gold prices can make their way above the $1,300 mark during this current rally, it would be a decidedly bullish sign going forward.
Adding to the furor over the seemingly escalating pace of jihadist terror attacks is a brewing diplomatic crisis in the Middle East that has taken the foreign policy establishment off-guard. A handful of Arab and Gulf states have abruptly cut diplomatic ties with the small but wealthy nation of Qatar over its sometimes contradictory stance toward some of the region’s rival powers, namely Saudi Arabia and Iran. This same situation occurred in 2014 but a protracted conflict was averted. Aside from effectively stalling the business operations of Qatar Airways, the diplomatic freeze could influence oil prices if the Qataris begin increasing production in retaliation for the Saudi-led opposition.
Thursday will prove to be an important political flashpoint with ramifications for the global economy as three major events all take place on the same day: elections in the U.K., the June meeting of the European Central Bank (ECB), and former FBI Director James Comey’s testimony before the U.S. Congress. Markets could swing if any one of these developments produces a surprise, so volatility should be expected in any case.
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