After posting modest gains on Thursday amid a market sell-off in stocks, the precious metals were sharply higher on Friday. Some of the safe-haven flight is due to a terrorist attack in Barcelona yesterday that left at least a dozen dead and many more injured. A second plot was apparently foiled before inflicting further damage.
Spot gold approached $1,300 per ounce on Friday, adding 0.7% to trade at $1,297/oz in the first half-hour markets were open in New York. This is also a significant technical breakthrough for gold, which has twice met hard resistance at the $1,296/oz level, its previous high this year. Silver prices jumped 1.3% higher to $17.22/oz. Platinum gained the same 1.3% while palladium added about 1%.
Looking back, the precious metals were mixed by the end of the session on Thursday:
Gold: $1,287.50/oz (+$4.70, +0.37%)
Silver: $17.01/oz (-9¢, -0.53%)
Platinum: $973/oz (-$3, -0.31%)
Palladium: $914/oz (+$8, +0.88%)
Meanwhile, the closing numbers for Wall St yesterday were uniformly bad:
Dow Jones: 21,750.73 (-274.14, -1.24%)
S&P 500: 2,430.01 (-38.10, -1.54%)
Nasdaq: 6,221.91 (-123.19, -1.94%)
It was the second-worst daily performance for the S&P thus far in 2017. Stocks in Asia and Europe were sharply lower on Friday, and futures in the U.S. were pointing slightly lower. The safe-haven trade also drove the 10-year Treasury yield below 2.20%.
Yesterday’s repugnant terrorist attack in Barcelona, Spain was carried out by a man in a white van who drove down one of the main thoroughfares of the city known as Las Ramblas. Full of tourists and small shops and boutiques, the street became the scene of a massacre as the driver plowed through pedestrians and other bystanders, swerving side-to-side in a deliberate attempt to take as many lives as possible. It’s been reported that a second related effort by a suicide bomber was thwarted by local authorities.
While the Barcelona attack is certainly driving greater fear and anxiety around the global markets, it’s not the only factor weighing on equities. Although several companies reported earnings that exceeded expectations, investors have been disappointed with second-quarter earnings on Wall St in general.
This has driven volatility considerably higher after one of the calmest periods for equities in recent memory. The VIX volatility index (often called the “fear gauge” for Wall St) jumped an eye-popping 33% on Thursday alone. It’s not surprising that all of this panic and uncertainty has vaulted gold to its highest level since Election Day in early November.
In addition, the latest concerns in Washington, D.C. center around rumors that White House economic advisor Gary Cohn may consider quitting the Trump administration. Thus far, all parties have denied Cohn is contemplating such an exit from his post, but the speculation is growing after the president dissolved his council of business leaders earlier in the week. Cohn is seen as the primary expert who can help enact the president’s agenda regarding tax reform, so his departure would be a huge blow. Moreover, Cohn is not the only potential shake-up: chief White House strategist Steve Bannon is also reportedly on thin ice after giving an interview that contradicted several of the president’s positions on global affairs.
Looking ahead to next week, the annual summit of economic experts in Jackson Hole, Wyoming will take place. Fed Chair Janet Yellen is expected to attend after skipping the event last year, as are several other prominent policymakers.
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.