Thursday saw the precious metals continue to trend lower amid exuberant confidence in the world’s stock markets, supposedly augured by the Dow Jones Industrial Average eclipsing the 20,000 mark for the first time ever on Wednesday.
After losing ground yesterday, spot gold slumped to its lowest level in a month this morning, trading around $1,190/oz at 10 am in New York. The spot silver price likewise lost about 1%, sinking to about $16.80/oz. Platinum and palladium managed to slip only modestly, falling 0.2% and 0.4%, respectively.
Today, the markets are following the same risk-on pattern: global stocks are mostly higher while investors are selling safe haven assets like gold and bonds. After gold futures hit a 10-week high, the yellow metal has followed up with a two-day losing streak.
For months, it seems, the markets have been pining for the Dow Jones to trade above 20,000, which is did for the first time ever on Wednesday. The index closed at 20,068.51. Goldman Sachs (GS), the largest component of the Dow, has helped carry it across the 20k milestone. The DJIA is a price-weighted index, meaning that the higher-priced shares on the 30-company index are given greater weight.
The S&P 500 and Nasdaq also hit all-time highs on Wednesday and continued to chug higher today. Elsewhere, Asian shares were solidly higher overnight while European bourses saw mixed results in early trading. Quarterly earnings reports for major companies will continue to drive action in equities.
Traders haven’t responded much to this morning’s news that weekly jobless claims hit a one-month high of 259,000 claims, up by 22,000. Consensus expectations had called for 245,000 new claims. Wall St still seems to take the report as a reason for optimism, as it is the 99th straight week that the measure has come in below 300,000.
Also, the U.S. Census Bureau reported that the trade deficit was flat in December at $65 billion after dropping by 0.5% the month previous.
Bonds Take a Beating
Much like the precious metals, government bonds have seen a swift selloff amid the stock market feeding frenzy. The 10-year Treasury yield is now nearly 2.55%. Similarly, bonds have been falling (sending yields higher) across the developed world. Due to a lack of demand, the Bank of Japan even skipped its latest bond sale.
We’re finally seeing a bit of clarity in the Brexit situation, as Prime Minister Theresa May confirmed that she must secure the approval of both houses of the British Parliament in order to invoke Article 50 of the EU charter and exit the common market. However, Scotland and Northern Ireland—also full-fledged members of the U.K.—will not be given a say in the matter. This has reignited calls by Scottish politicians for another independence referendum. Also, fourth-quarter GDP in the U.K. rose by 0.6%.
Crude oil prices have soared since President Trump announced the re-authorization of the controversial Dakota Access and Keystone XL pipelines. Both price benchmarks in the West (Brent and WTI) were more than 2% higher on Thursday.
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