The precious metals were higher on Friday amid the distinct potential for a government shutdown in the United States today.
More investors are deciding to hold gold as a hedge (or insurance) against this possibility. Spot gold was up $7 (+0.5%) to $1,333/oz in early trading.
The silver price pared earlier gains to trade at $16.95/oz. Platinum added $10 (+1.0%) to $1,010/oz and palladium moved back near $1,100/oz after gaining 0.5%.
U.S. stocks fell yesterday and are likely to remain muted unless a deal to fund the government is reached in Congress.
The House of Representatives passed its version of a short-term spending bill. However, the bill needs 60 votes to pass the Senate, requiring some bipartisan support.
All of this must be sorted out by midnight to avoid a shutdown.
Interestingly, past instances where non-emergency services from the state were closed due to no funding agreement haven’t typically caused the stock market to sell off.
The dollar was flat at 90.5 on the DXY index this morning. The odds are good that the protracted battle over the spending bill is weighing down the greenback.
Meanwhile, the euro traded flat against the USD. The pound sterling lost 0.3% to $1.385 while the Japanese yen gained about 0.45% to ¥110.6 per dollar.
A possible government shutdown is also hitting the Treasury market. The 10-year yield was up again to 2.62%.
Most commodities took a hit on Friday. Crude oil prices slumped 1.5% as WTI crude traded back down at $63/bbl.
Oil production in the U.S. is expected to rise sharply in the coming months due to the recent price gains. This could change the calculus for OPEC at its upcoming meeting. The cartel may reconsider its self-imposed production cuts.
Wall St traded slightly in the green on Friday. Quarterly earnings continue to trickle out, with big companies like Apple and Netflix expected to report soon.
European shares were sharply higher. The Euro Stoxx 50 gained 0.6% and Germany’s DAX jumped 1%. The FTSE was up just 0.1%.
Stocks were also higher in Asia despite rising tensions between Taiwan and China.
Cryptocurrencies recovered some ground yesterday following their sharp correction lower. Regulators are still unwilling to approve a bitcoin ETF, which would make it easier for large institutions and mutual funds to speculate on the altcoin.
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