Tuesday morning saw the precious metals build off of the positive momentum from the end of yesterday’s trading session. Spot gold gained a third of a percent, or $4.10 per ounce, to trade at $1,261.40/oz in New York.
Silver prices added 11¢ (+0.7%) to return to $16.37/oz. The argent metal has been by far the most volatile of the four major precious metals over the last three weeks, ranging from as low as $15.60/oz and as high as almost $17/oz.
Platinum and palladium were each up about $6 per ounce.
Here’s a look at Monday’s closing numbers:
Gold: $1,257.30/oz (-$1.10, -0.09%)
Silver: $16.25/oz (+2¢, +0.12%)
Platinum: $966/oz (+$3, +0.31%)
Palladium: $876/oz (+$11, +1.27%)
Return of the Doves
After pulling off a pair of quarter-point rate hikes during the first half of the year, the Federal Reserve appears to be reverting back to a more dovish approach to monetary policy. Markets are still expecting the central bank to — perhaps — finally begin the painful process of shedding extra weight from its bloated balance sheet, which was the result of years of quantitative easing (QE). The Fed is always worried about “rocking the boat” of Wall St, and right now this seems an especially immediate risk for the central bank to do so: market volatility is alarmingly low, and many people are beginning to use the word “complacent” to describe it. The volatility index (or “fear gauge”) known as the VIX is not far from all-time lows, and the S&P 500 is currently on its longest streak of trading days without a move of 0.3% in either direction ever recorded.
However, many are doubtful that QE can be unwound so easily, and it’s telling that various members of the Fed have been resorting to much more dovish public comments in order to pull back interest-rate expectations. In addition to “perma-dove” James Bullard, the president of the St. Louis branch of the Fed, one of the FOMC’s newest members joined in the dovish talk: Neel Kashkari, who became a voting member for the first time this year and a noted critic of this year’s rate hikes. Kashkari, best-known for being one of the drafters of the TARP bank bailout bill and once (unsuccessfully) running for the Republican nomination for governor of California, is seen as an influential voice with moderates on the FOMC.
The dovish statements from Fed members were the turning point for gold and silver during yesterday’s session. This rebound for the precious metals coincided with a weaker dollar, which is an expected reaction to any news that the Fed may not normalize policy as quickly as anticipated. The dollar was steady overnight around 93.3 on the DXY index, but remains about 7% lower than where it stood the day Donald Trump was inaugurated president.
The blitz of Fed commentary continues this week, as the New York Fed’s Bill Dudley, one of the most powerful members of the FOMC, will be speaking on Thursday.
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.