Precious Metals Move Steadily Higher

December 18th, 2017 by

Global markets were churning higher on Monday morning as the seasonal Santa Claus rally begins to take hold one week before the Christmas holiday. The precious metals advanced as well. Although gold prices are down roughly 3% over the last four weeks, the yellow metal was up 0.3% on Monday to $1,259/oz. Spot silver traded slightly higher to $16.07/oz.

Platinum surged 1.3% (+$12) to move back above $900/oz. Palladium was the only outlier, slipping 0.5% to $1,009/oz.

Stock futures were up ahead of this morning’s opening bell, signaling new all-time highs for the Dow Jones Industrial Average (DJIA) and the S&P 500. Strongly positive sentiment regarding the tax bill currently working its way through Congress is still helping drive equities higher. Stocks were also sharply higher in Asia, Australia, and Europe. British Prime Minister Theresa May is preparing to lay out her Brexit transition plans to Parliament in the coming days.

Both the euro and the pound gained against the dollar, which slipped 0.3% on the DXY index to 93.65. The 10-year Treasury yield was two basis points higher at 2.37%. However, bonds have remained in a fairly tight range over the last month as traders and investors await the finalized version of the aforementioned tax bill. A vote on the measure is expected sometime in the middle of this week.

In the energy market, both WTI crude and Brent crude posted modest gains after the U.S. oil rig count fell for the first time in over a month. Producers are taking some supply off the table in the hopes of supporting oil prices around $60 per barrel as the holiday travel season begins. Both crude benchmarks were outdone by natural gas futures, which surged nearly 4% on Monday.

The debut for bitcoin futures on the Chicago Mercantile Exchange (CME) went off without a hitch. This follows the introduction of futures trading for bitcoin on another exchange (the CBOE) the week prior. The cryptocurrency recently touched above $20,000 before tumbling 3.6% this morning, continuing its pattern of extreme volatility.

Some analyst are pointing to a possible price target of $1,700/oz for gold by the end of 2018, especially if prices hold above $1,250/oz to begin the new year. However, expect hedge funds to engage in some tax-related selling as 2017 comes to a close in order to make the performance of their portfolios look better.

Looking ahead, the Bank of Japan (BOJ) holds a policy meeting later this week and the latest estimate of third-quarter GDP in the U.S. will also be released this week.

 

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.