Precious Metals Up Again as Dollar Pulls Back

May 11th, 2018 by

The gold price crept upward to about $1,324/oz Friday morning, rising $3 (+0.2%).

Each of the other precious metals was also higher. Spot silver gained 10¢ (+0.6%) to $16.78/oz.

Platinum was steady around $925/oz while palladium added $5 (+0.5%) to reclaim $1,000/oz.

All four metals also rose during yesterday’s session.

Softer Dollar, Repurchases Help Stocks

The greenback continued to slide back from its recent highs to close out the week.

Bloomberg’s dollar index was off by 0.3% this morning to 92.4.

The pound advanced 0.5% to about $1.358 and the euro was up 0.3% to $1.195.

U.S. stocks finished about 0.9% higher Thursday. Wall St futures were mixed before trading opened.

Shares fell between 0.3% and 0.4% in Europe, although equities nudged higher in London.

Stock indices rallied 1% in Tokyo and Hong Kong overnight but ended 0.5% in the red in Shanghai.

In the tech sector, microchip maker Nvidia saw its stock price hit an all-time high after strong earnings and an optimistic outlook.

One of the big drivers of the stock market’s performance has been share buybacks, also known as repurchase agreements. Stock buybacks during the first quarter were on track to be their highest ever on record ($158 billion) according to data going back to 1998.

Volatility has also fallen to its lowest level since late January.

Bonds and Commodities Both Take a Pause

Government bonds in most advanced economies were higher on Friday.

Treasurys saw mostly neutral action. The 10-year yield held unchanged around 2.96%.

Meanwhile, the yield curve—the spread between shorter and longer bond yields—is currently at its flattest since August 2007.

Traders are watching anxiously to see if the yield curve inverts, when short-term bonds actually offer higher yields than their long-term counterparts.

An inverted yield curve is a fairly surefire sign of an impending recession, implying that rates will be lower in the near future (perhaps because the Fed is forced to cut interest rates to stimulate the economy).

Commodities didn’t get much of a lift from the weaker dollar.

Crude oil fell modestly: WTI crude traded at $71.25/bbl and Brent crude dipped to $77.25/bbl.

The Middle East continues to endure turmoil. Israeli and Iranian forces exchanged missile strikes near the Golan Heights yesterday.

Later today, President Trump will give a speech on how the administration plans to bring down rising prescription drug prices.

The president will also meet with the country’s ten largest automakers to discuss the state of the auto sector.

In other news, the meeting planned between Trump and North Korea’s Kim Jong-un is scheduled to take place in Singapore on June 12th.

 

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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