After the precious metals trended lower on Wednesday, the markets woke up a bit on Thursday, with slightly more volatile action for the gold price. Spot gold bounced up and down this morning before trading around $1,324/oz, slight above unchanged from yesterday’s close. Spot silver was still 2¢ lower to $17.72/oz. Palladium lost 0.75% while platinum was flat at $980/oz.
Here are Wednesday’s closing numbers:
Gold: $1,322.50/oz (-$8.90, -0.67%)
Silver: $17.74/oz (-14¢, -0.78%)
Platinum: $979/oz (-$9, -0.91%)
Palladium: $930/oz (-$16, -1.69%)
Dow Jones: 22,158.18 (+39.32, +0.18%)
Nasdaq: 6,460.19 (+5.91, +0.09%)
S&P 500: 2,498.37 (+1.89, +0.08%)
DXY: 92.39 (+0.50, +0.54%)
WTI crude: $49.32/bbl (+$1.09, +2.26%)
A pair of important economic reports came out on Thursday. First, jobless claims were reported lower for last week by the Labor Department, falling by 14,000 to a total of 284,000 claims filed for unemployment benefits. However, the data is incomplete because it doesn’t take into account this weekend’s arrival of Hurricane Irma in Florida. Thus the impact of the storm is somewhat obscured in the numbers, but will probably be apparent in next week’s report. The jobless data also showed that the number of Americans continuing to receive benefits dipped by 7,000, and held below 2 million for the 22nd consecutive week.
The latest Consumer Price Index (CPI) was also released on Thursday, and the indicator showed a considerable uptick in inflation. CPI rose by 0.4% during the month of August, which was well above analysts’ expectations and considerably higher than the 0.2% increase posted in July. One of the contributing factors was higher energy prices due to the disruption of the hurricanes. This is also evidenced by the fact that crude oil prices are again on the rise: West Texas Intermediate crude is now approaching $50 per barrel for the first time since late July. WTI hasn’t consistently traded above this level since April.
The inflation data could certainly have a strong influence over whether or not the Fed decides to raise interest rates at its September meeting of the FOMC. While the central bank has intimated that it plans to raise rates one more time this year, most analysts are skeptical that it will happen. The two most likely opportunities appear to be this month and perhaps in December, which was essentially the same scenario we saw in both 2015 and 2016.
It’s not just the U.S. that’s beginning to see greater inflation: the Bank of England hinted at its most recent policy meeting that it may finally raise its own benchmark interest rate in the event that inflation continues to trend higher. This hawkish tone helped push the pound sterling up sharply to nearly $1.34, its highest of 2017. The dollar fell by about 0.2% and the 10-year Treasury yield eased to 2.20%.
Meanwhile, weaker factory output and retail sales in China during August knocked global stocks off their all-time highs. Shares in Hong Kong and Shanghai each fell by about 0.4% while Japan’s Nikkei 225 index lost 0.3%. The FTSE 100 in London tumbled 1% this morning partly due to the stronger pound. U.S. indices were mixed, with the S&P 500 and Nasdaq sinking into negative territory during early trading.
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.