Gold Price Fades Ahead of Iran Decision

May 8th, 2018 by

Bond yields and oil prices fluctuated this morning as investors focused on the imperiled status of the Iran nuclear deal.

Still, spot gold sank 0.6% lower (-$7.50) to about $1,306 an ounce on Tuesday thanks to a stronger dollar.

The silver price held above $16.30/oz, losing 13¢ (-0.8%).

Palladium was off $2 (-0.2%) to $965/oz while platinum opened $3 in the red (-0.33%) at $907/oz.

Each of the sister metals rose yesterday while gold and silver slipped marginally lower.

The Platinum Group Metals (along with base metals) have gotten a lift from sharply rising Chinese imports, which have jumped 21.5% year-on-year. This raises expectations for greater industrial output in China, especially in the automobile sector.

Markets Hesitate Awaiting Iran Decision, Except for Dollar

According to a recent tweet, President Trump plans to announce his decision on the Iran nuclear agreement this afternoon at 2 pm EST.

Most observers expect Trump will decertify the pact, which he has repeatedly called the “worst deal” in history.

Nonetheless, the dollar extended its 2018 high, adding 0.5% Tuesday to above 93.2 on the DXY index.

This pushed the euro down 0.6% to $1.185, also its lowest point year-to-date.

The British pound lost 0.5% to dip below $1.35, threatening to breach its January low. However, the Japanese yen was steady around ¥109.2 per USD.

Stocks rallied overnight in Asia. Equities were more than 0.5% lower across mainland Europe.

London’s FTSE 100 only lost 0.2% despite home prices in the U.K. falling more than 3% in April, the biggest monthly drop in eight years.

Shares on Wall St halted ahead of the president’s highly-anticipated announcement regarding the Iran deal.

If the United States pulls out of the agreement negotiated in 2015, it raises the possibility of sanctions being reimposed on the Islamic Republic. The move could have a jarring effect on the global oil market.

Oil Prices Fluctuate, Bonds Continue to Slide

Crude oil pulled back sharply this morning after advancing about 1.5% on Monday.

Brent crude traded down 0.7% (-53¢) to $75.65/bbl. West Texas Intermediate erased yesterday’s gains, losing 1.15% (-80¢), although the benchmark remained just shy of $70 per barrel.

10-year Treasurys also fell, sending yields three basis points higher to 2.98%.

Jamie Dimon, the outspoken chief executive of megabank JPMorgan, is forecasting 4% yields on the 10-year T-note in the near future.

Sovereign debt elsewhere in the world saw yields rise even farther in early trading.

While the U.S. Treasury is ramping up its issuance of new debt this week, President Trump has proposed $15 billion in spending cuts that will be considered on Capitol Hill.

Congress has yet to make fiscal austerity a priority despite GOP control of both the House and Senate.

Back on Wall St, investors continue to sour on Tesla as the electric car company is burning through cash at an alarming rate.

In other news, the controversial attorney general of New York, Eric Schneiderman, resigned last night amid multiple allegations of abusing women revealed by a report in The New Yorker.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation.

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