The precious metals continued to ride positive momentum into the new year, although the markets opened mixed on Wednesday. Spot gold initially traded slightly lower but recovered to unchanged around $1,317/oz shortly after the opening bell. Spot silver was likewise unchanged, hovering just above $17.15/oz.
Platinum rose 0.85% to $950/oz while palladium slipped $5 (-0.45%) back to $1,080/oz.
Meanwhile, the dollar finally reversed some of its recent losses by rising 0.2% to back above 92.0 on the DXY index. The greenback’s main competitors (the yen and euro) traded flat, although the British pound sterling did advance modestly to $1.355. Global bonds saw some evenly distributed demand, with the 10-year Treasury yield holding around 2.44%.
In general, however, a softer U.S. dollar has been a boon to commodities these past few weeks. Aside from the past month’s rally in precious metals, both copper and crude oil have recently hit new multi-year highs. This has pushed up inflation expectations for 2018. WTI crude approached $61/bbl while Brent crude broke above $67/bbl, each approximately representing two-year highs.
Shares were higher in Europe and Asia, following the upward trajectory that Wall Street has charted to start the new year. The Nasdaq closed at an all-time high on Tuesday, surpassing the 7,000 mark for the first time ever. The Dow Jones and S&P 500 also were on track for record highs as all three U.S. indices surged in futures trading this morning. Markets will await the release of the meeting minutes from December’s FOMC gathering later this afternoon at 2 pm EST. This should provide some sense of how the Fed plans to approach more interest-rate hikes in 2018. Equities also received a boost from strong manufacturing numbers for December reported by the Institute for Supply Management (ISM).
The new MiFID II rules for trading and finance for Europe go into effect today. Although no major disruptions have arisen yet, trading volumes in the eurozone are lower as firms navigate some of the new regulations. Many participants in the European financial system are receiving exceptions, however, that allow them to delay conforming to MiFID II for another two years. (For a sense of how complicated and sweeping the changes may prove to be, keep in mind that companies have known the new rules were coming for several years.) What remains unclear is how the law may affect U.S. companies doing business in Europe.
In international news, the upcoming Winter Olympics may provide a rare incentive for cooperation on the Korean Peninsula. The games are being hosted by South Korea in the city of Pyeongchang. In a bid to potentially reach an agreement on participating in the competition, North Korea has opened up dialogue with its southern neighbor for the first time in several years.
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