Spot gold fell when markets opened in New York on Monday, trading down about $6 (-0.5%) to $1,273/oz. All of the precious metals were lower at the opening bell: spot silver lost 15¢ (-0.9%) to $16.27/oz, platinum was down $11 (-1.2%) to $926/oz, and palladium slid $13 (-1.3%) to $1,002/oz.
Action for the U.S. dollar on the forex markets is accounting for the vast majority of gold’s movement on Monday. The USD traded 0.33% higher to 93.2 on the DXY index, lifted by progress in Washington on cutting corporate taxes.
Traders were generally embracing a risk-on approach to begin the week. Blue-chip stocks were sharply higher on Wall St along with the stronger dollar. The Dow Industrials added 0.9% while the Nasdaq gained 0.7%. However, the S&P 500—usually seen as the gauge of the broader markets—actually traded 0.2% in the red.
Now that the Senate has passed its version of the tax bill, it must be reconciled with the slightly different bill that passed the House of Representatives. Then the final measure can be voted on and signed into law by the president. Even though some analysts assumed the benefits of reforming the tax code had already been priced in to stock valuations, U.S. markets have tended to rally on each bit of positive news about the legislative process.
The markets, especially traders of U.S. bonds, will also be watching for the looming government shutdown that would occur on Saturday (December 9th) if Congress cannot reach a short-term deal to cover the government’s expenses. The 10-year Treasury yield was up four basis points to 2.40%.
Both major crude oil price benchmarks tumbled more than 1% this morning. WTI crude fell back to $57.70/bbl and Brent crude traded a few cents above $63/bbl.
Across the Atlantic, the dragging 18-month negotiations for Brexit could finally be close to reaching a “breakthrough.” British Prime Minister Theresa May will reportedly have lunch with Jean-Claude Juncker, the president of the European Commission. According to Bloomberg,
If the May-Juncker lunch goes well, a joint statement will be released that refers to the three main divorce issues: the Irish border, the rights of EU citizens in the U.K. after the split, and the financial settlement, according to a person familiar with the situation. Both sides want an agreement that will allow leaders to give the green light to the start of trade talks at a summit on Dec. 14.
This would be the first domino that subsequently leads to the long process of restructuring all of the U.K.’s trade deals with the rest of Europe. The news helped the British pound advance above $1.35. The euro was down nearly 0.5% to $1.184.
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