The precious metals trickled lower yet again on Thursday as traders bought the dip on Wall St and awaited tomorrow’s big jobs report. Spot gold fell more than $8 (-0.7%) at the open of Thursday’s session to trade at $1,254/oz, another new four-month low. Spot silver lost 13¢ (-0.8%) to trade around $15.80/oz. Platinum was mostly flat at $900/oz yet palladium surged 1.8% into the green to trade back above $1,000/oz.
Finding little new information to trade on until Friday, stock futures pointed modestly lower this morning. Tech stocks rebounded yesterday to help buoy several of the biggest companies in the sector, many of which have gained more than 40% year-to-date. The dollar was slightly higher on the DXY index to 93.66, a two-week high for the USD. The seeming inevitability of an interest-rate hike from the Federal Reserve this month has fueled much of selling in the gold market. Higher rates increase the opportunity cost of holding gold relative to a riskier asset.
The continued plunge for the precious metals was accompanied by a broad-based decline across various commodities. The losses over the past month are due in part to concern over China’s future economic growth and whether it will continue to consume such large amounts of industrial metals. Demand for nickel, copper, and other resources are showing acute sensitivity to expectations for the Chinese economy. Crude oil stood apart from the rest of the pack, rebounding on Thursday after spending much of this week pulling back from a recent rally in oil prices. WTI crude traded around $56/bbl after losing nearly 3% on Wednesday.
The euro and European stocks were dragged lower during today’s session by a second consecutive month of contraction for German industrial output. The pound sterling continued its slide as negotiators in the Brexit divorce are running up against a deadline for the current round of talks. If no progress is made, the two sides are unlikely to meet again until March. Asian markets were mixed. Incredibly, bitcoin prices shot past the $15,000 mark for the first time ever. The cryptocurrency is up 30% in just the last two trading sessions.
Aside from the much-anticipated nonfarm payrolls report tomorrow, the needle of the markets is being led in the short-term by developments on Capitol Hill. President Trump is scheduled to meet with top Democrats today in a bid to hammer out some sort of stopgap spending deal while Congress continues to tackle tax cuts. A continuing resolution to fund the government for a few more weeks could set up yet another showdown over shutting down the government sometime in between Christmas and New Year’s. Congressional Republicans are trying to avoid the typical pattern of unwanted spending being shoved through the legislature right before the Christmas holiday, when many members are eager to get home to their families, thus making them more apt to approve unnecessary measures.
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