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Choppy Action for Gold Price

June 28th, 2017 by

Wednesday morning saw up-and-down trading for spot gold during the early hours of the session. The gold price was bouncing around $1,251/oz, up about 0.3% by 9:45 am EST. Meanwhile, spot silver was 10¢ per ounce higher, adding 0.6% to trade just north of $16.70/oz.

Platinum was up modestly as well, adding about $3 to reach $920/oz. Palladium was flat after losing ground yesterday.

© Alexmoe | Dreamstime.com

© Alexmoe | Dreamstime.com

Here are Tuesday’s closing spot prices for reference:

Gold: $1,246.70/oz (+$2.20, +0.18%)
Silver: $16.63/oz (+5¢, +0.33%)
Platinum: $917/oz (+$2, +0.22%)
Palladium: $856/oz (-$10, -1.15%)

After tumbling on Tuesday, stocks looked to rebound during today’s session. You can review yesterday’s stock performance in the U.S. below:

Dow Jones: 21,377.1 (-0.15%)
S&P 500: 2,419.4 (-0.81%)
Nasdaq: 6,146.6 (-1.6%)

The Nasdaq, an index largely made up of tech stocks, looks to break its two-day losing streak to begin this week. These shares have been particularly sensitive to the Senate’s efforts at healthcare reform being stymied for the time being. Futures pointed higher as markets opened.

Stress Tests

Today, the Fed will release the results of last week’s “stress tests” for the country’s biggest banks. This annual audit is done to gauge the health of the country’s financial system, an especially grave concern in the post-financial crisis world. The evaluations are designed to assess how well the banks would hold up in the possible scenario of a sharp recession. The Fed scrutinizes how well-capitalized the banks are to withstand such a downturn, as well as how effectively they are managing risk.

Source: Wall Street Journal

Source: Wall Street Journal

In the forex market, the euro hit a one-year high today in response to the shift to a more hawkish tone by the European Central Bank and its primary mouthpiece, ECB President Mario Draghi. At his most recent public appearance, Draghi hinted that the central bank may begin unwinding its quantitative easing measures as the eurozone economy shows signs of improvement. Tighter monetary policy is generally associated with a stronger currency, although this trend has not played out according to such logic for the dollar despite rising interest rates in the U.S.

While most of the news out of Europe has been positive, its banks remain in a somewhat perilous situation. Italy just had to bail out two of its biggest banks to the tune of €17 billion, while there are now reports that Germany’s Deutsche Bank, one of the largest financial institutions in the world, could stand to lose as much as $60 million by betting on derivatives that would pay out if inflation in the U.S. begins the pick up. (This has not happened yet.)

This rally for the euro helped keep the dollar parked at 96.4 on the DXY index. The euro is currently trading above $1.13, up more than 1.3% from Monday’s close and a far cry from its 2017 lows below $1.05. Treasurys fell in the U.S., sending the benchmark 10-year yield 4 basis points higher to 2.21%.

 

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.

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