Gold prices are trading just above unchanged this morning, as the U.S. dollar eases from a seven-month high. While the release of the minutes from September’s FOMC meeting was basically a non-event, a huge miss in Chinese exports has markets wondering if it portends a slowdown in economic growth. If so, then the Fed may not raise benchmark interest rates in December as expected.
At 10am in New York, gold is trading at $1,260.60 an ounce, putting spot gold up by $5.70, and gold futures up $6.80. 10am silver prices are at $17.50 per ounce. Spot silver is 5 cents higher, while December silver is flat.
Precious metals futures yesterday saw December gold settling at $1,253.80 an ounce, down $2.10. December silver ended trading at $17.50 an ounce, nearly unchanged. Precious metals spot prices finished higher Wednesday. Gold gained $2.50 to close at $1,254.90/oz, while silver grabbed two cents to close at $17.45/oz.
Chinese Trade Data
Stock indices around the globe were almost uniformly in the red 1% or more in reaction to significantly worse-than-expected trade numbers out of China, which occupies the center of global trade.
The country’s trade balance came in at about $41 billion, well off of the $53 billion surplus expected. This went hand-in-hand with a 5.6% drop in exports, which analysts had anticipated would rise by 2.5%. It was the first time exports fell in seven months.
The forex markets saw a rush of safe haven demand into the Japanese yen as a result, trading almost 1% firmer against the USD at ¥103 per dollar. Meanwhile, the yuan sank to another fresh six-year low.
Pound Dips, Dollar Pauses
The British pound continued its downward trajectory—its seventh trading day of losses in the past nine—and is threatening to fall below $1.21. Sterling has plunged more than 6% against the dollar already in October. It has also fallen to just 1.11 euro after trading around 1.4 euro earlier this year.
Aside from concerns about Prime Minister May’s plans for a “hard Brexit” with Europe, the tumbling pound is causing a rift between one of Britain’s largest grocery chains, Tesco (TSCO), and its multinational supplier, Unilever (UL). The latter is citing the weaker pound as cause for raising its prices by as much as 10%. This has caused a drastic shortfall in popular brands from Tesco’s shelves as these supermarkets resist the price hike. Both firms saw their stock prices drop by more than 2% on Thursday morning.
The recent rally for the U.S. dollar seems to have taken a breather, as the DXY index was roughly 0.25% lower on Thursday with a reading of 97.7. An anticipated tightening of monetary policy by the Federal Reserve in December has helped drive the greenback higher. The FedWatch odds of a quarter-point rate increase at the FOMC’s December meeting fell from the previous day to 63.6%. This dip in expectations is supportive of higher precious metal prices in the short run.
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