gold bars and gold coins

Spot Gold Tumbles Overnight, Rebounds Wednesday Morning

February 21st, 2018 by

gold bars and gold coins

Spot gold opened just above $1,330/oz on Wednesday, down about $20 from where it closed last week.

However, the yellow metal is sharply higher from its overnight lows.

Spot silver added 18¢ (+1.1%) to trade right around $16.60/oz.

Platinum was about unchanged at $1,000/oz while palladium was down 0.5% to $1,018/oz.

Markets Await FOMC Minutes From January

Wednesday afternoon will see the release of last month’s meeting minutes for the Fed Open Market Committee (FOMC). It was the last gathering attended by former Chair Janet Yellen.

The Fed is expected to raise interest rates as many as four times this year.

At least one member of the Federal Reserve Board, Philly Fed President Patrick Harker, is walking back these rate-hike expectations. Harker told reporters that he believes two rate increases in 2018 would be appropriate.

This would bring the federal funds rate, the central bank’s key interest rate target, to 1.75% to 2.00%.

Ahead of the publication of the meeting minutes, the dollar was up while stocks fell.

The Nasdaq index has consistently been outpacing other U.S. indices of late. Yesterday, the S&P 500 lost 0.6% and the Dow Jones fell by 1.0%. Meanwhile, the Nasdaq was flat.

The DXY index traded modestly higher this morning to 89.85.

This left the yen mostly unchanged at ¥107.45.

Disappointing manufacturing data in the eurozone dragged the common currency lower to $1.232.

An unexpected rise in unemployment in the U.K. dinged the pound sterling, which slid 0.4% to $1.394.

Shares were off across Europe but the FTSE 100 added 0.25% in afternoon trading.

Asian markets saw a mixed session last night. The Hang Seng index rallied 1.8%, continuing to outperform the region after recovering from the widespread correction a few weeks ago.

Everybody Is Watching Treasurys, Bonds for Signs of Inflation

The benchmark 10-year Treasury yield was down slightly to 2.88% this morning.

Still, the yield has climbed more than 80 basis points from 2.04% in early September.

Government bonds also fell modestly in Europe and Asia.

Two-year T-note yields also held near a nine-year high at 2.25%.

This comes as the government moves to a fresh round of selling Treasurys. The Treasury Department plans to auction $258 billion worth of bonds this week. It already recently issued $179 billion in new debt.

A great deal of the action in bonds has to do with increasing inflation expectations.

It would develop over the long-term, but investors appear to be watching carefully for early signs of rising inflation.

Inflation would help boost commodity prices.

Crude oil pulled back again on Wednesday. WTI crude was down 38¢ (-0.6%) to $61.40/bbl on news of rising U.S. oil inventories.

Brent crude cut earlier losses but was still off 0.2% to $65.10/bbl.


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.

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