Commodities Surge Midweek Despite Flat Dollar

April 18th, 2018 by

A slew of geopolitical developments drove commodity prices higher on Wednesday, including the precious metals.

The gold price moved back above $1,350, adding $5 (+0.35%) to $1,352/oz.

Spot silver broke above $17 per ounce for the first time in two months, jumping 44¢ (+2.6%) to $17.20/oz.

Platinum also rose 0.8% (+$8) to $943/oz while palladium surged 2.6% (+$26) to above $1,030/oz.

The precious metals have remained stuck in a fairly tight range of late, so a significant move higher could induce a wave of technical buying.

Here’s one sign that this may already be happening: Gold ETFs have seen 24.4 metric tons of inflows so far in April.

Today also marks the beginning of the Akshaya Tritiya festival for Hindus and Jains, a traditional gold-buying event.

The arrival of the holiday is driving premia for gold and silver much higher in India.

Dollar Unchanged While Stocks Sustain Positive Vibes

The DXY index was flat this morning at 89.5.

Slightly disappointing consumer prices in the U.K. helped the British pound finally ease off its highest against the dollar in nearly two years. Sterling traded down 0.4%.

The euro inched back up to $1.24 and the yen was off 0.2% to ¥107.2 per USD.

Stocks pointed higher again on Wednesday after U.S. markets closed comfortably in the green yesterday.

The Nasdaq gained 1.75% while the S&P and Dow added about 1% during Tuesday’s session.

Equities were slightly higher in Europe on solid corporate earnings. An inflation reading in the eurozone came in lower than expected for March, however, at just 1.3%.

Germany’s DAX index was down marginally. Stocks rose 0.9% in London.

Shares rallied overnight in Asia, led by Japanese indices gaining more than 1%.

Southwest Airlines saw its share price fall after a blown engine resulted in the first passenger fatality in the company’s history.

A snafu with the outdated computer systems of the IRS has forced the agency to extend the tax filing deadline an extra day.

In bond trading, the 10-year T-note yield was mostly unchanged at 2.84%.

Commodity Prices Climb On Geopolitics

Commodities were up sharply across the board despite the dollar moving sideways.

Both crude oil benchmarks advanced better than 1.5%, hitting 2.5-year highs.

Some of the action was driven by ongoing geopolitical tensions between Russia and the West.

The Kremlin is mulling a “precise and painful” response to any upcoming U.S. sanctions.

So far, the White House has quashed the idea of new sanctions in the absence of further provocation.

The news nonetheless triggered a dramatic response in base metal prices: Aluminum shot up 5% to a six-year high and nickel prices spiked 11%.

Copper also jumped 2.75% to $3.18 per pound.

Elsewhere, a leadership transition in Cuba is now underway. Raul Castro, brother of longtime dictator Fidel, is stepping down.

Turkish president Recep Erdoğan also made headlines by calling for snap elections in June. Erdoğan recently suggested that loans from the International Monetary Fund (IMF) should be paid in gold.

The IMF holds a stockpile of more than 2,800 tons of gold, surpassed only by the reserves of Germany and the U.S.

Meanwhile, the IMF is warning that risks to the global economy are resembling the period just prior to the last financial crisis.

In the cryptocurrency sector, Bitcoin prices recovered from a swift selloff to trade back at $8,000 per BTC.

 

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