Gold Pops And Drops To Start Week

October 24th, 2016 by

gold-rallyGold prices held steady in Asian trading overnight, but faded midday in Europe. That softness was immediately erased as prices jumped more than $9.00 an ounce on the US open. Gold traded above $1,271 an ounce minutes after markets opened. That sudden jump sparked some profit-taking, and prices fell back to unchanged an hour later.

At 10am spot gold was trading at $1,265.00 an ounce, just 70 cents below Friday’s close. Spot silver was trading at $17.68, up 1%.

A marginally weaker dollar this morning is helping precious metals. The euro gained earlier today on upbeat wholesale prices reports in the EU.

Oil prices are weaker this morning, as Iraq announces that it will not sign any agreement to freeze or cut oil production. The Iraqi oil minister cited that the nation needed to increase oil exports to pay for the ongoing war with Daesh (ISIS).

stock rallyStocks opened higher on the news of several blockbuster merger deals. TD Ameritrade and Toronto-Dominion Bank announced that they will buy Scottrade for $4 billion, then carve it up between them. In the manufacturing sector, avionics giant Rockwell Collins will purchase B/E Aerospace for $6.4 billion. B/E is a major supplier of aircraft interiors for commercial and business jets, while Rockwell Collins is one of the world’s largest supplier of avionics and in-flight entertainment systems.

Of course, the huge news this morning is AT&T’s plan to purchase Time Warner for $85 billion. To no one’s surprise, the announcement sparked concerns that the deal would concentrate too much power in one company. AT&T’s cable TV and cellphone service, combined with Time Warner’s ownership of HBO, CNN, television channels, and movie production, would create a company that controlled major content providers and delivery systems.

All the talk of PMIs and mergers has given markets a risk-on attitude today. This is being reflected in lower bond prices, as investors cycle back into equities.

Nervousness over the imminent presidential election has abated, for the time being, but the widening rift between the GOP establishment and Republican presidential candidate Donald Trump promises more turmoil. Some super-PACs have publicly given up on Trump’s chances to win the election. Their advertising and “get out the vote” efforts presume a Hillary presidency, and urge GOP voters to help block President Hillary’s agenda by voting for Republican senators and representatives.

If Trump does pull out a surprise win in 15 days, his retribution by Democrats and the establishment GOP will be swift and terrible.

 

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