american gold eagles

Gold Withstands Profit-Taking On Draghi, Irma

September 7th, 2017 by

Between cautiously dovish comments from the head of the European Central Bank (ECB) to the massive storm in the Caribbean headed toward the East Coast of the United States, the precious metals continued to rally on Thursday morning. Each of the metals have withstood a heavy (but unsurprising) bout of profit-taking to quickly reclaim all of Wednesday’s losses late in the afternoon.

Spot gold recovered by about 0.5% to $1,340/oz, near a one-year high, in early trading in New York. Spot silver also rebounded back to where it had opened for much of the week, right at $17.95/oz. While the regaining of lost ground for the precious metals has been swift, one must expect a fair amount of traders selling their gold for profit in light of this kind of extended rally: gold prices are up over $80 (+6.4%) in the course of the last 30 days.

Meanwhile, platinum was essentially flat a few bucks above $1,000/oz and palladium gained 0.4% to $935/oz.

american gold eagles

Here are the closing numbers from yesterday:

Gold: $1,333.50/oz (-$5.90, -0.44%)
Silver: $17.85/oz (unchanged)
Platinum: $1,003/oz (-$3, -0.30%)
Palladium: $931/oz (-$18, -1.90%)

Dow Jones: 21,807.64 (+54.33, +0.25%)
S&P 500: 2,465.54 (+7.69, +0.31%)
Nasdaq: 6,393.31 (+17.74, +0.28%)
DXY: 92.23 (+0.01, +0.01%)
WTI crude: $49.15/bbl (+49¢, +1.01%)

The markets reacted sharply on Thursday to two bits of important data. This morning, the ECB met and decided to stand pat on all of its various stimulus measures, with no talk from President Mario Draghi of tapering off on support from the central bank before the end of 2017.

Many believe that with a recovery in growth across the eurozone and less imminent fear of deflation by the ECB, the policymakers in Brussels would begin a gradual reduction of its current—and still unprecedented—economic stimulus program. The ECB left its ultra-low interest rates unchanged and will continue its €60 billion monthly injection of liquidity into the markets through at least the rest of the year.

The euro still traded above $1.20 despite the market taking this as a dovish signal. This knocked the dollar down to a two-year low below 91.5 on the DXY index, down almost 1%. U.S. bonds rose yet again, causing the 10-year T-note yield to fall below 2.10%. Wall St opened modestly lower.

The second big piece of economic datum came from the Labor Department, which reported the biggest leap for filing for unemployment benefits in nearly five years. (This previous low in 2012 coincided with the super-storm Sandy that hit the Atlantic Coast.) Hurricane Harvey in Texas similarly caused the measure to jump, as first-time jobless claims rose by 62,000 over the previous week.

Image courtesy of NOAA and Brevard Times

Now, Hurricane Irma is barreling through the north side of Puerto Rico and the island of Hispaniola, which is split between the Dominican Republic and Haiti. The Category 5 storm has wind speeds reported over 185 mph and is forecast to make landfall in Florida early next week. Across the state, gas stations have run out of fuel and big box stores have encountered water shortages as people prepare to weather the storm if there are similar levels of flooding, damage, and power outages seen in Houston. There have already been at least 10 deaths in the Caribbean due to Irma, and millions are without electrical power.

 

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.

Leave a Reply