Precious Metals Weaker Heading Into Fed Week

October 30th, 2017 by

The precious metals were somewhat choppy in early trading ahead of a busy week of economic data and potential moves by central banks. This is in addition to quarterly earnings reports continuing to trickle across the wire from Wall St and the expiry of options tomorrow on Halloween. Spot gold was down about $1 to $1,272/oz when markets opened in New York while spot silver lost 10¢ (-0.55%) to $16.75/oz. Platinum and palladium were both just slightly off after trading was closed for the two metals on Friday.

This is how markets closed out last week:

Gold: $1,273.20/oz (+$7, +0.55%)
Silver: $16.84/oz (+8¢, +0.45%)
Platinum: $915/oz (unch.)
Palladium: $960/oz (unch.)

Dow Jones: 23,434.19 (+33.33, +0.14%)
S&P 500: 2,581.07 (+20.67, +0.81%)
Nasdaq: 6,701.26 (+144.49, +2.20%)
DXY: 94.81 (+0.05, +0.05%)

Markets were mostly quiet as a big week of monetary policy announcements and other data is awaited, beginning with the Federal Reserve Open Market Committee (FOMC) meeting on Tuesday and Wednesday. Coincidentally, President Trump is expected to grab the news cycle by announcing his nominee for Fed chair by Thursday. On Friday, October’s employment numbers are due in the nonfarm payrolls. Besides the Fed meeting this week, the Bank of Japan and Bank of England will also be gathering.

On top of everything else, Wall St will be watching as the details of the GOP tax bill are hammered out. The hope on Capitol Hill is to vote on the legislation before the Thanksgiving recess. U.S. stock indices once again churned to a record-high close to end last week, and global stocks are trading at or near their highest in multiple years. The dollar dipped on Monday morning by about 0.15% on the DXY index. The 10-year Treasury yield was just below 2.39%. Shares in Shanghai tumbled almost 0.8% overnight on concerns about the Chinese bond market being overburdened by excessive state debt.

The first wave of financial news this morning came from the Department of Commerce, which reported that consumer spending saw its biggest month-on-month jump in more than eight years during September. Spending was a full 1% higher than August, led especially by car purchases. This was also seen in the strong durable goods orders numbers (which includes motor vehicles) that came out last week.

However, savings plummeted during the month. Both the heavy outlays and lack of saving have been attributed to recovery efforts after a pair of hurricanes rocked the U.S. in Florida and Texas. However, with gauges of inflation and disposable income only growing slowly, there is some indication that this sharp rise in spending could quickly cool off. On the other hand, the annual “Santa Claus rally” that accompanies the winter season may help lift consumer spending from late October through December.

 

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.