After rebounding from Friday’s losses to begin this week, spot gold was down another 0.4% to $1,272 per ounce early on Tuesday morning. However, by about 10 am EST, the yellow metal had once again recovered, up almost 0.2% to $1,280/oz. Some of the selling pressure came from traders who are trying to offset losses in their stock portfolios by cashing in their gold.
Spot silver also recovered, down just 2¢ this morning to trade at $17/oz even. Platinum was down 0.5% to $926/oz and palladium was just below unchanged at $982/oz.
The leading economic news of the day was the Department of Labor reporting that wholesale prices in the U.S., as measured by the producer price index (PPI), jumped far more during October than analysts had anticipated. The prices of goods and services rose 0.4% during the month, which also represented a 2.8% increase year-on-year. The gains were led by pharmaceuticals and fuel. This is seen by some as an indication that inflation is approaching the Federal Reserve’s 2% target.
Stocks in Asia and Europe were mostly down as the trading session opened in North America. The Shanghai Composite and the EURO STOXX 50 each lost 0.5%, marking the sixth straight day of losses for the latter. France’s CAC 40 fell by the same margin. Concerns about the ongoing slowdown in growth in China’s economy weighed on shares across the region. Wall St opened roughly 0.3% in negative territory.
After Germany reported strong GDP growth for the third quarter, the euro surged 0.7% to $1.175, its highest in about three weeks. This sent the dollar tumbling 0.45% on the DXY index to 94.0. The 10-year Treasury yield was steady, just a hair below 2.40%. Germany is also hosting a conference on central banking in Frankfurt that will feature many of the world’s most influential policymakers. Back in the U.S., newly-nominated Fed Chair Jerome Powell seems to be pushing back against the notion that he is simply a continuation of Janet Yellen’s leadership, criticizing the much-maligned communication strategy of the Fed.
Another major development on Tuesday came as Venezuela finally entered an official default, potentially roiling the global markets. The country’s state-owned oil company has begun missing bond payments, which triggered the rating company Fitch’s to declare the oil operation to be in default. Moreover, Standards & Poors declared the government itself to be in default. This is the culmination of a gradual meltdown for the socialist South American government, which has used its enormous oil reserves to secure emergency lending from Russia and China. However, oil production has slumped and the country’s foreign reserves are essentially depleted. On Tuesday, WTI crude traded below $56.50/bbl, losing about 0.5%.
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