The precious metals advanced again on Wednesday morning thanks to a weaker dollar and light trading volume around the markets. Spot gold was up slightly (+0.1%) to $1,284/oz, another new four-week high. Silver prices also traded at their highest in a month, gaining 7¢ (+0.45%) to $16.60/oz. Platinum slipped 0.2% to $920/oz and palladium advanced another 0.5% to just shy of $1,050/oz.
The low trading volumes we can expect to continue between the Christmas and New Year’s holidays is giving technical traders more influence over prices than usual. Gold futuers for February pointed modestly higher to $1,288 per ounce.
The U.S. dollar hit a four-week low of its own, mirroring the highs for gold and silver. The DXY index traded down 0.3% to fall below 93.0. This helped the euro rally 0.35% to $1.19 while the British pound gained 0.33% to move above $1.34. The Japanese yen was barely higher at ¥113.3 per dollar. In spite of three interest-rate hikes from the Fed in 2017, the USD has tumbled about 12% against the euro year-to-date.
Wall St looked to rebound after losing ground on Tuesday. Shares in Europe and Asia were mostly flat, although London’s FTSE 100 added 0.3%. There was some fresh demand for bonds as the 10-year Treasury yield lost three basis points to 2.45%. Still, the spread between the yield on U.S. bonds and their counterparts in Germany is at its highest in two decades.
Consumer confidence data in the U.S. is due out later today. One sign of confidence in the economy has been a rising number of bets by investors that homeowners won’t default on their mortgages. In general, consumer sentiment has been improving as the year has progressed, especially since tax reform successfully made its way through Congress. Despite the broad consensus that the tax bill will ultimately boost growth, other changes made in the legislation could change the calculus for whether or not firms choose to incorporate.
In the commodities sector, crude oil prices are paring gains after an oil pipeline exploded in Libya yesterday. Brent crude slumped nearly 1% to $66.40/bbl and WTI crude fell back to $59.50/bbl after hitting its highest in more than two years. Meanwhile, the supply of copper coming from China is getting squeezed by a government-mandated pause in production to reduce pollution. (China is the world’s top producer and consumer of the metal.) This pushed copper prices to a three-year high and provided a lift to a number of mining stocks.
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