After an upbeat performance last week, the precious metals looked to pick back up where they left off on Monday. While spot silver gained 7¢ (+0.4%) to trade above $16.80/oz, the gold price was much more volatile, bouncing up and down between $1,265/oz and $1,270/oz during early morning trading.
Platinum added a modest $3 per ounce while palladium surged better than 1.3%, gaining $12 to approach $900/oz.
Monday is last trading day of July, so a little extra volatility is to be expected. Many traders and investors must close out their positions that are expiring today, which leads to end-of-month gyrations that aren’t seen under normal circumstances.
Closing Out July
Stock futures in the U.S. pointed about 0.3% higher, and this is exactly where the Dow Jones opened on Monday morning. Corporate earnings from the second quarter continue to roll out, with all eyes on Apple announcing its results later this week, along with Tesla, Sony, and Warren Buffett’s Berkshire Hathaway. Manufacturing data will be released tomorrow, while the big news item will be Friday’s non-farm payrolls report.
Despite strong earnings lifting Wall St, political uncertainties within and without the United States have been weighing heavily on the dollar. While differences in monetary policy from the world’s central banks is also part of the cause, there’s no doubt that the apparent disunity in Washington, D.C. is contributing to the weak dollar. The recent dismissal of the press secretary and the chief of staff from the White House is not engendering confidence in the Trump administration’s personnel, either. Although the greenback was up slightly this morning, it remains at just 93.4 on the DXY index. At any rate, the uncertainties surrounding U.S. politics are likely to limit how many investors choose to dump gold, providing support for the current level for gold prices.
One direct consequences of a softer dollar has been a surge in commodities. Industrial metals like iron are rallying, and copper has surged to a two-year high. Similarly, oil prices have jumped: WTI crude is trading around $50 per barrel for the first time since May.
Investors will watch for any changes at Thursday’s meeting of the Bank of England’s version of the FOMC, although no rate hike (nor cut) are expected. In terms of political influences on the world economy, the expulsion of two-thirds of the Americans working at embassies (and living) in Russia is likely to stoke tensions between the former Cold War rivals even further. Congress recently passed legislation calling for tougher sanctions on the Kremlin, though the legislation still awaits the president’s signature.
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.