Better Risk Appetite and Stronger Dollar Push Gold Price Below $1,340

April 12th, 2018 by

The precious metals saw selling pressure this morning after a strong performance on Wednesday.

Spot gold stumbled 1.0% (-$13.50) on Thursday morning, trading at $1,340/oz.

The silver price also fell by 1.0% (-17¢) back to about $16.50/oz.

Platinum held around unchanged at $930/oz, but palladium tumbled 1.45% to $945/oz.

Markets Focus on Jobless Claims, Q1 Earnings

Weekly jobless claims were reported by the Department of Labor on Thursday. Following the extremely disappointing growth of nonfarm payrolls in March, last week’s jobless numbers were more robust.

Government data showed that new claims fell by 9,000 last week to 233,000.

In a separate report, import prices for March were unchanged overall. The data was held down by petroleum prices dropping for the second consecutive month.

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Stocks on Wall St moved sharply higher, up about 1.2% this morning.

The U.S. dollar was also up, trading at 89.9 (+0.4%) on the DXY index. This provided some added fuel for gold’s decline.

Accordingly, the yen and euro were both off roughly 0.5% against the dollar.

Several big financials are reporting quarterly earnings today, including JPMorgan Chase and Wells Fargo. Banks are one of the main beneficiaries of the tax cuts passed by Congress last year.

Interestingly, small-cap stocks have outperformed the broader markets during this year’s bout of high volatility. When all three major U.S. indices were down on Wednesday, the Russell 2000 index actually eked out a 0.2% gain.

By comparison, the Dow Jones lost 0.9% on the day.

Equities traded higher across Europe but posted modest losses in Asia overnight.

Bitcoin rallied better than 10% on Thursday, but doubts remain about the cryptocurrency’s long-term viability. BTC briefly traded back above $8,000 for the first time in almost three weeks.

Fed Meeting Minutes Reveal Optimism

Yesterday’s FOMC meeting minutes were fairly hawkish on balance.

Source: Slate

All of the individual members of the committee saw near-term risks to the economy biased to the upside. This is the first time since these opinions began to be recorded in 2011 that none of the voting members saw risks tilted to the downside.

The gold price had rallied as high as $1,365/oz on Wednesday before tumbling back to $1,350 following the hawkish FOMC outlook.

The yellow metal still closed up 1%, outpacing silver. Its 50-day moving average (50-DMA) crossed above the 200-DMA, a bullish technical signal that is known as a “golden cross.”

Overall, geopolitical tensions centered around Syria have helped commodity prices. Crude oil in particular has been on a tear. However, WTI crude and Brent crude each fell by about 0.5% on Thursday.

A fresh issuance of debt from the Treasury Department may finally be having an effect on bond yields. The 10-year T-note rose four basis points this morning to 2.82%.

While the hearings on Capitol Hill with Facebook CEO Mark Zuckerberg have concluded, the European Union is moving ahead with its own General Data Protection Regulation (GDPR). The new rules go into effect on May 25th.

In other news, Speaker of the House Paul Ryan announced he won’t seek re-election, joining a record-high number of other current members of Congress who are also stepping down in 2018.

 

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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