gold bars and gold coins

February CPI Meets Expectations, Precious Metals Rebound

March 13th, 2018 by

gold bars and gold coins

The precious metals saw fresh demand on Tuesday, lifting prices in early trading.

Spot gold advanced about 0.2% (+$2) to $1,325/oz when markets opened in New York.

Similarly, spot silver added 7ยข (+0.4%) to trade near $16.60/oz.

Platinum was up 0.6% to $970/oz while palladium rebounded over 1% to $985/oz.

Yesterday saw palladium slump 2% but the other precious metals pared their losses by the end of the session.

Inflation Fears Cool as CPI Offers No Surprises

Meanwhile, the Nasdaq rose in mixed session for U.S. indices on Monday. Both the Dow and S&P 500 fell modestly.

Bonds were higher, finally diverging from their correlation with equities. The 10-year yield slipped to 2.87% and was down another two basis points this morning to about 2.85%.

It was the opposite scenario for the dollar. The DXY index slipped 0.2% to 89.9 yesterday and fell again to 89.7 on Tuesday.

Short positions on the dollar are currently at two-month low, however.

Upcoming rate hikes from the Fed are expected to give the USD a boost, but for now the precious metals are moving higher due to a weaker dollar.

The big economic news on Tuesday was the February report on the consumer price index (CPI) from the Department of Labor.

CPI rose 0.2% month-on-month and is up 2.2% year-on-year. This was right in line with what analysts were expecting. The reading was well short of January’s 0.5% surge in consumer prices.

This was seen as a slight deceleration of inflation pressures. Steady rent prices placed a damper on core CPI, according to the same report.

Trump Fires Secretary of State Tillerson

Amid a policy shift on tariffs and a possible diplomatic meeting with North Korea, markets were jarred by the news that President Trump fired Secretary of State Rex Tillerson this morning.

Tillerson is expected to be replaced with sitting CIA Director Mike Pompeo.

The president must also name a new chief economic adviser in addition to filling to vacancy left by Tillerson’s dismissal from the cabinet.

Stocks in the U.S. stumbled from their morning highs after the shake-up at the White House.

Shares were mixed in Europe and Asia. The Japanese yen dipped roughly 0.5% against the dollar, although the euro and British pound were both in the green.

Crude oil continued to lose ground to start the week. WTI futures were down again, threatening to fall below $61/bbl.

 

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