Friday morning saw the precious metal slip just a bit lower when markets opened in New York. Spot gold was down about $4 per ounce to $1,241/oz while spot silver rebounded from a loss of 5¢ (-0.3%) to trade a notch higher at $16.60/oz. Platinum was actually $5 per ounce higher (+0.5%), but palladium fell the farthest, shedding 0.6%.
For reference, here are the closing prices for Thursday, June 29th:
Gold: $1,245.40/oz (-$3.40)
Silver: $16.58/oz (-19¢)
Platinum: $918/oz (unchanged)
Palladium: $847/oz (-$8)
Dow Jones: 21,286.83 (-167.78, -0.78%)
S&P 500: 2,419.74 (-20.96, -0.86%)
Nasdaq: 6,144.35 (-90.06, -1.44%)
All Eyes on Currencies
The foreign exchange markets have been very active this week following a series of more hawkish signals from central banks around the world. The pound sterling has rallied for seven straight winning sessions in response to mounting pressure on the Bank of England to raise rates sooner rather than later. The euro has likewise posted gains for three consecutive sessions, and for much the same reason: the ECB has shifted toward a similar “sooner rather than later” stance on tapering off of its QE program.
All of these gains for world currencies have come at the expense of the U.S. dollar, which has slumped to its lowest in nine months. Even the Chinese yuan and Canadian dollar have made up significant ground against the USD. While other countries are moving toward tighter monetary policy, persistently low inflation may cause the Fed to slow its pace of rate hikes for the time being.
At the same time, the spread between yields on U.S. Treasurys and foreign bonds has been narrowing as a result. Even with a softer dollar, precious metal prices have likewise seen less safe-haven demand as investors divert money into the forex trade. Nonetheless, stocks in the U.S. opened higher on Friday.
In other economic news, the Department of Commerce reported that both consumer spending and general price inflation were weaker than expected during May. Consumer spending rose a paltry 0.1% while inflation actually declined for the second month out of the last three. The report wasn’t all bad news, however: Personal income for Americans was up 0.4% against expectations of 0.3%. Interestingly, the rate at which Americans are saving their extra income rose to an eight-month high.
In the crude oil market, prices rose on Friday morning to continue to best rally for energy prices in six months. Nonetheless, oil has tumbled 10% during the second quarter, erasing $113 billion in market cap from the companies listed on the MSCI World Energy Sector index.
As today is the last day of the second quarter, expect a somewhat more volatile trading session today.
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.