Gold and silver prices suffered a modest correction yesterday, tumbling in afternoon trading. Spot gold failed to break through stubborn resistance between $1,290 and $1,300. On Tuesday morning, the yellow metal opened at $1,283/oz, up about 0.6% from the previous close.
Meantime, silver prices recovered 17¢ (+1.0%) this morning to trade back above $17/oz. Both of the Platinum Group Metals were higher as well.
Stocks were sharply higher in Asia and Europe, led by the Hang Seng index in Hong Kong advancing 1.9%. Wall St opened about 0.5% in the green as traders and investors gear up for the much-anticipated “Santa Claus rally” that tends to accompany the spending splurge during the holiday season.
The dollar opened flat at 94.0 on the DXY index this morning. Likewise, most of its major peers were near unchanged. Still, the USD is down roughly 8% year-to-date.
The news on Tuesday was focused on a lawsuit filed by the Department of Justice to block the proposed merger between media giants AT&T and Time Warner. Historically, the DOJ has not blocked vertical mergers such as this one because it poses no clear threat to competition within the industry. In this case, however, there is a longstanding recalcitrance between Time Warner and the Trump White House. The DOJ wants the company to divest some of its assets as part of the agreement, such as spinning off CNN, HBO, or its Turner Sports division.
Elsewhere in D.C., Janet Yellen has confirmed that she will follow precedent by leaving the Federal Reserve Board of Governors when Jerome Powell takes over as Fed Chair at the beginning of 2018. Yellen could have chosen to remain a board member until her term expires in 2024.
The Fed unfortunately remains stuck between a rock and a hard place in terms of its interest-rate policy. It faces what is referred to as a flattening yield curve, meaning that shorter maturity bonds are seeing their yields rise faster than longer-dated Treasurys. The 10-year T-note yield is currently 2.35% and has mostly traded sideways of late. This dynamic is mainly due to the widespread belief that rates will be rising imminently. (The Fed has largely telegraphed this as its preferred plan.) A similar conundrum faced the central bank during the tenure of Alan Greenspan, and it could portend less rate hikes in 2018 than currently expected.
In ongoing Brexit developments, major financial firms are continuing to relocate from the U.K. to the European mainland as uncertainty clouds the future role the country will play in the continent’s financial system. London is one of the world’s primary financial hubs, but the legal divorce from the EU has thrown its continued dominance in this sphere into question.
Investors will likely be troubled to learn that there has been yet another Bitcoin hack. $31 million worth of BTC was reportedly stolen from an exchange known as Tether. This raises concerns that the cryptocurrency market is still not mature enough to handle these recurring thefts; because Bitcoins or any other cryptocoin must be held in a digital wallet or electronic exchange, they face the same counterparty risk as other fiat assets—perhaps even more so, given their decentralized nature.
By comparison, of course, nobody can “hack” your gold bars or gold coins!
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.