Precious metals are down across the board this morning, as markets continue to react to the unexpectedly bullish tone of the Federal Reserve regarding weakening inflation. What some are calling an overly optimistic outlook has been the main driver of gold prices the last few days. Silver prices are also weaker this morning, after finishing last week in the red.
The US shooting down a Syrian Air Force SU-22 fighter jet in a direct escalation of the war in Syria, and another terror attack in London over the weekend were not enough to support gold this morning.
Friday Precious Metals Prices
Precious metals spot prices ended Friday little changed. Platinum was the only one of the big four metals to post any meaningful gains, up $7.00 an ounce to end the week at $929.00 an ounce.
On the futures markets, August gold notched slight gains after coming under intense selling pressure the previous two days. The August contract rose $1.90 an ounce higher to settle at $1,256.50 an ounce. However, it closed lower on a weekly basis, ending 1.2% lower. This marks the second week in a row that gold has fallen on a weekly basis.
July silver lost 6 cents to settle at $16.66 an ounce, down 3.3% for the week. July platinum futures rose $6 an ounce, settling at $927. It still eased 1.4% lower for the week. September palladium gained almost 1% to end at $866 an ounce. This was 1.1% higher on a weekly basis. Palladium COMEX contracts are still the best-performing major futures contract, up 25% year to date. This strength has been nearly all on the industrial side, as “the other PGM” continues to be overlooked in the investment sphere.
Escalation of the War in Syria
In an unprecedented move yesterday, an American F/A-18 fighter jet shot down a Syrian Air Force SU-22 fighter-bomber that was attacking US-backed rebel troops near the former ISIS capital of Raqqa. US Central Command told reporters that a previous bombing attack against coalition militias had been pushed away by a flight of F/A-18s that had flown close to the Syrian aircraft. The second attack, after repeated warnings, was met with lethal force by the US jets flying Combat Air Patrol (CAP) over the coalition forces.
Terror Attack in London
Also on Sunday, the driver of a van careened onto the sidewalk and through a crowd of Muslims awaiting the start of prayer services. The attacker reportedly jumped from the van screaming anti-Muslim epithets. He was tackled and restrained by citizens on the scene until police could arrive.
Yellen: The Girl in the Rose-Tinted Glasses
Federal Reserve chair Janet Yellen caught markets off-guard in her Wednesday press conference after the Fed raised interest rates another quarter-point. Expressing an outlook that many felt ignored recent economic data, Yellen reinforced that the Fed was expecting to raise interest rates one more time this year, and also start drawing down the $4.5 trillion in bonds and mortgage-backed securities it purchased in its quantitative easing (QE) programs.
This morning, New York Fed president William Dudley, the most powerful of the regional Federal Reserve presidents, did nothing to soften that bullish tone.
Stocks were up in Asia and Europe, with Wall St also opening higher. European stocks got a boost as French voters gave new president Emmanuel Macron a ringing mandate to push through his economic reforms. His party, “En Marche!”, was created only last year, and had never fielded parliamentary candidates. The strategy of running political newcomers and wooing sympathetic candidates from the establishment political parties paid off, as En Marche! won 350 out of the 557 seats in the lower house of Parliament. Macron’s mandate may not be as strong as it seems. Voter turnout was the lowest for a parliamentary election in France since the end of WWII.
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