Gold prices are being pushed lower to start a new week of trading, as are bonds. Spot gold was down $15 an ounce in early trading, while silver was 53 cents (3.05%) lower. Markets are still on an extremely risk-on footing, as the equity festivities continue over Donald Trump’s victory in last Tuesday’s presidential election.
Gold had the exact opposite week than everyone expected on a Trump win. Friday’s closing price of $1,227.60 for spot gold was $31.00 lower on the day as a wave of sell stops were triggered, for a weekly loss of $76.40. December gold futures were crushed on Friday as well, suffering a massive $42.10 loss to end at $1,224.30. This is “paper” gold’s lowest close since June. Futures lost 6.2% for the week, the worst weekly loss since June 2013. It was a sad end to a four-week weekly winning streak.
Silver had a Jekyll-and-Hyde week, shifting from “investment mode” to riding copper’s coattails and moving like an industrial metal. While copper ended with a 10.8% gain for the week (the best performance in five years), the fairy tale for silver ended badly. Poised to log a weekly gain, silver got massacred. Spot silver fell $1.22 an ounce on Friday for a daily loss of 6.56% and a weekly loss of 5.64%. December silver shed $1.35, -7.2% for the day. Silver futures lost 99 cents on the week, down 5.39%.
The Trump party on Wall St finished with nice weekly gains. The Dow notched another all-time record high on Friday, to end 5.4% higher for the week — the best weekly gain since December 2011. The S&P 500 slipped marginally, down just 3 points, but it also had a very good week. The 3.8% gain was the index’s best week since October 2014. The Nasdaq overcame some really rough patches this week to end Friday 0.5% higher, and the week 3.8% higher.
Wall St is trending lower this morning, likely due to traders taking profits after last week’s big gains. The Nikkei rose as third-quarter GDP in Japan blew through estimates to log a 2.2% gain year-over-year. Economists were expecting a 0.9% gain.
Bond traders got a well-deserved breather Friday, as the Treasuries market was closed for Veterans Day. That didn’t prevent the iShares 20+ Year Treasury Bond ETF from closing for the worst weekly loss since the fund was formed in 2002.
This morning, the DXY dollar index is up more than 1% to break through the 100 barrier. The British pound was the only currency to gain against the dollar last week, as it also rode increasing expectations of inflation. The cable is giving back some of those gains this morning.
Those predictions of imminent inflation continue to crush bond prices. The yield on the 30-year Treasury note rose above 3% this morning, while the yield on the 2-year Treasury bill broke through the 1% barrier.
Oil prices are lower again, as hopes for a reduction in output by OPEC fades, and worries that Trump’s protectionist trade policies could be a drag on global growth.
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