Gold prices are modestly higher this morning, as Wall St follows Asian and European stocks lower. The US dollar is also lower, which is helping both gold and oil prices. Stocks are on the back foot this morning as gold advances ahead of the first presidential debate between Hillary Clinton and Donald Trump.
At 10am in New York, gold is trading at $1,341.10. Spot gold is $4.00 higher, after closing essentially flat on Friday. December gold futures are near flat, trading 60 cents lower after losing $3.00 Friday. Silver is trading at 19.57 at 10am in New York, putting spot silver down a dime. December silver futures are down 24 cents, after 29 cents Friday.
The SPDR Gold Trust (GLD) is up slightly this morning, after closing flat on Friday. The iShares Silver Trust (SLV) is down moderately in early trading, 0.37% lower, after gaining 1.4% Friday. The VanEck Gold Miners ETF (GDX) is up 0.59%, clawing back some of Friday’s 2.9% loss.
As much pain as the dollar is in this morning, the British pound is in even worse shape. The euro is seeing modest gains after upbeat business sentiment in Germany, while the Japanese yen continues to defy the Bank of Japan’s efforts to devalue it.
Oil prices are up over 2% this morning, despite both Saudi Arabia and Iran downgrading this week’s oil minister meeting in Algiers from a decision-making gathering to merely a preliminary discussion regarding a freeze in oil production. These gains are only wiping out about half of Friday’s losses, when WTI fell 4% and Brent fell 3.7%. This was the worst day for oil futures since mid-July, and broke a four-day win streak.
Treasuries had a very strong week last week, with yields on the 10-year Treasury note marking the largest weekly drop in two months. Reports showing the US PMI slowing down more than offset Boston Federal Reserve president Eric Rosengren’s quote Friday that he wanted to raise interest rates last Wednesday. The CME Group FedWatch tool this morning is giving a 48.8% chance for a December rate hike. Everyone is ignoring the Fed’s November FOMC meeting, as it takes place six days before the presidential election.
Round 1: FIGHT!
Tonight is the first presidential debate between Democratic nominee Hillary Clinton and Republican nominee Donald Trump. No matter who is declared the winner afterward, stocks and bonds will react in force. Trump has wiped out Hillary’s lead in national polls, and this debate has more upside for him than her. Trump has a very low bar to clear regarding expectations of his performance — as long as he doesn’t act bombastic or talk about birth certificates, he has a good chance of coming out of the debate with enough momentum to seriously challenge Hillary.
On the other hand, Clinton will have to defend her actions as secretary of state and as senator, which gives Trump plenty of ammunition to paint her as untrustworthy. The bar is set much higher for her as a career politician — a bar she may be unable to clear.
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