The precious metals regained some ground on Monday afternoon after slipping at the open of the session. The pattern seemed to repeat itself on Tuesday morning, as the gold price was off its lows of $1,272/oz. By about 10 am ET, spot gold was still down $5 to $1,277/oz but had previously traded as high as $1,283 overnight.
In the meantime, spot silver lost 12¢ (-0.8%) to slip to $16.92/oz. Platinum was down $3 to $920/oz while palladium was steady at $947/oz.
The U.S. dollar was also steady at 93.9 on the DXY index on Tuesday. Expect some volatility in U.S. markets and the gold market as the president’s nomination for the next Fed chair is eagerly awaited. If a policy hawk like John Taylor is nominated, it will undoubtedly cause some jitters among investors.
However, if the pick is someone more dovish, like current Fed members Neel Kashkari or Jerome Powell, or if current chair Janet Yellen is renominated (a possibility President Trump has yet to rule out), or even if early front-runner and White House economic advisor Gary Cohn gets the nod, it will likely be met by a rally for equities. (The stock markets prefer a more easy-credit Fed that’s willing to step in with stimulus.)
So until it’s clearer what direction the central bank’s policies—especially interest rates—will be headed, volatile fluctuations with gold would not be surprising. In fact, gold’s recovery on Monday was due in no small part to stocks turning negative during afternoon trading, which caused many market participants to buy the dip in gold for some short-term returns.
Shares overseas were mixed while Wall St opened in the green. The Dow Jones continued to far outpace the biotech-heavy Nasdaq and the broader markets, represented by the S&P 500. Because the Dow only includes 30 firms that are considered major representatives of their respective sectors, this is an obvious sign that the blue-chip stocks are carrying the indices higher while the vast majority of equities lag behind. During one trading day last week, corporate giant Apple Inc. actually accounted for roughly half of the Dow’s movement. This trend seems to have been exasperated by quarterly earnings season, where the biggest companies have been some of the first to report Q3 results.
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.