Spot Gold Rebounds Overnight Following Iran Deal Exit

May 9th, 2018 by

Spot gold was mostly unchanged Wednesday morning at $1,314 per ounce, but the yellow metal was up sharply from its overnight lows around $1,304.

Spot silver added 13¢ (+0.8%) to $16.57/oz.

Palladium gained 0.6% (+$6) to about $970/oz while platinum was flat at $914/oz.

Exit from Iran Deal Lifts Gold and Crude

Gold rose immediately after Trump’s announcement yesterday afternoon.

The precious metals also benefited from fluctuations in forex trading.

The dollar index slipped 0.2% to 92.9 this morning.

In response, the euro was up 0.1%, but the yen lost 0.6% to ¥109.75. The pound sterling gained 0.3% to approach $1.36.

Crude oil prices jumped 2.5% Wednesday in reaction to the U.S. exit from the Iran nuclear deal.

WTI and Brent crude traded at $70.75/bbl and $76.70/bbl, respectively.

The return of U.S. sanctions against Iran that were lifted as part of the nuclear agreement could have far-reaching consequences.

Companies will have between 90 and 180 days to wind down operations in the country or face fines. Sanctions will also impact Iran’s trading of gold and precious metals.

Yet the other parties to the deal—China, Russia, France, Germany, and the U.K.—remain committed to the accord.

It’s unclear how President Trump’s decision regarding Iran will ultimately shake out for global trade. Many European countries want to continue importing oil from Iran, as do other regional players like India and China.

Meanwhile, the EU is still America’s biggest trading partner.

The other major geopolitical conflict (with North Korea) appears to offer greater optimism. As relations with the DPRK are thawing, three Americans detained in the country are returning with Secretary of State Pompeo.

Stocks and Bonds React to Uncertainty

U.S. markets edged roughly 0.25% higher at Wednesday’s open.

stockHowever, stocks could be poised for a correction that is “past due” is Wall St doesn’t score fresh highs in the near term.

Higher oil prices lifted stocks 0.55% in London. Germany’s DAX and France’s CAC 40 both pared losses.

Indices fell about 0.4% in Tokyo and inched lower in Shanghai during overnight trading, but shares rose 0.4% in Hong Kong.

The 10-year T-note yield rose to 3.01%, up three basis points.

Bonds were mixed in Europe but fell sharply elsewhere.

$25 billion in 10-year Treasurys will be auctioned today, as well.

Bitcoin fell back to about $9,000 per BTC in early trading, but the cryptocurrency could rally back to $15,000 if a past pattern associated with the upcoming Consensus conference in New York City holds true to form.

 

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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