Gold Price Consolidates Near $1,330

July 19th, 2016 by

Gold prices were mostly flat on Tuesday morning as most pundits are expecting the precious metal to consolidate for time being after a string of impressive gains. Meanwhile, the silver spot price fell about 10¢ per ounce to trade right around $20/oz.

At 10 am EST, the price of gold hovered around $1,330/oz, 0.1% higher. Although platinum prices slid about 0.7% to fall from their recent high of $1,100/oz, palladium actually tacked on 0.8% to trade at $650/oz.

Influence from Global Markets

The currency markets largely calmed down during trading on Monday after the failed coup attempt in Turkey caused a great deal of volatility on Friday. The Japanese yen has been rallying lately—much to the chagrin of Prime Minister Shinzo Abe and the rest of his administration. Japan’s strategy centers around accommodative monetary policy and a weaker yen.

gold-yenHowever, Abe got some relief on Monday when the yen fell 1.3% against the dollar to trade around ¥106 per USD. Interestingly, the (perhaps temporary) rally for the yen has prompted many investors in Japan to opt for gold as a more reliable store of wealth, especially with the country’s bonds offering negative yields. Due to a stronger pound sterling and euro, the U.S. dollar still fell against a basket of its peers, dropping 0.1% on the DXY index.

Britain’s Home Secretary Theresa May has cleared the rest of the field of Conservative candidates and is now slated to succeed David Cameron as the country’s next prime minister. May has been characterized by some as a strong and stubborn leader in the mold of former PM Margaret Thatcher. Even with this new hope of stability, Brits are still buying up gold as a safe haven in the wake of the Brexit vote.

More Monday Action

The fact that both the Federal Reserve and the Bank of England seem to holding off on cutting interest rates has provided some indication to the markets that perhaps the global economy is not in as much trouble as they once thought. This reprieve has driven more money in equities, pushing the Dow Jones and S&P 500 into new record-high territory once again.

bank_bagOne of the catalysts of this rally has been better-than-expected quarterly earnings reports for the big banks. JPMorgan posted good numbers last week, and now following suit are Bank of America and Goldman Sachs reporting strong second-quarter profits this week. As a result, bank stocks continue to rise right along with Wall St, which has been buoyed by optimism in the tech sector. The Nasdaq actually outpaced by the Dow and the S&P during Monday’s session, for instance.

For the first time in almost two months, gold futures fell into negative territory last week, losing 2.3%. Although gold futures for August settlement posted a net loss last week, over the last six weeks they have added over 12%. The August gold contract did add about 0.1% yesterday to settle at $1,329.30/oz.

 

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.