Spot Gold Trades Flat at Wednesday’s Open

May 16th, 2018 by

Spot gold traded just above yesterday’s close at $1,291/oz after reaching as high as $1,296 overnight.

The silver price was also slightly above unchanged (+0.2%) at $16.28/oz.

Palladium pared its losses by the end of Tuesday’s session and moved modestly higher this morning to $983/oz.

Platinum dipped $5 (-0.55%) to about $890/oz, its lowest in six months.

A variety of traditionally uncorrelated asset classes showed an uncommon synchronicity yesterday: stocks, bonds, and gold all traded lower on the same day.

Gold futures endured their worst single-day losses since December 2016.

Stocks Lack Clear Direction After Housing Data

The Dow Jones Industrials turned negative year-to-date again after all three U.S. indices closed about 0.8% lower Tuesday.

Wall St was little changed at this morning’s opening bell.

This subdued action came after the Department of Commerce reported a somewhat sharp drop in housing data for April.

Building permits fell by 1.8% compared to the previous month while housing starts decreased by 3.7%.

New duties on imports of Canadian lumber were cited by Reuters as having an impact on construction growth.

However, new homebuilding is still close to the 11-year high hit in March.

The 10-year Treasury yield eased up about one basis point this morning to 3.07% after notching a seven-year high yesterday.

European stocks were mostly unchanged today, although the DAX advanced about 0.25%.

Shares were lower across Asia, with the Shanghai Composite slipping 0.8%.

Dollar Still Rallying, Spread in Oil Benchmarks Widens

The DXY dollar index continued to climb Wednesday, adding 0.25% to 93.4. It was off its earlier highs.

Some analysts believe the dollar’s rally will peter out around the 94.0 level.

The euro lost 0.35% to trade below $1.18. Although the pound was only off marginally, sterling slid below $1.35.

The yen also fell 0.2% to ¥110.2 per dollar.

Bitcoin plunged 5.9% in early trading, slipping back near $8,200. The popular exchange Coinbase is slated to introduce high-frequency trading, which will likely exacerbate the volatility of cryptocurrency prices.

oil glutCommodities mostly retreated in response to a firmer dollar.

Yet according to the International Energy Agency (IEA), higher crude prices may put a damper on oil demand this year.

WTI crude was down over 40¢ (-0.6%) to $70.90/bbl. Brent crude fell 0.7% (-55¢) to $77.85/bbl. The gap between the two oil contracts is the widest in three years.

Global markets were a bit jittery over the (perhaps unsurprising) threat by North Korea to abandon next month’s peace talks.

Discussions with South Korea that were planned for today were suspended. An official from the North suggested that next month’s summit in Singapore would be scrapped if the U.S. and its allies ask for large concessions—specifically, the unilateral dismantling of the DPRK’s nuclear weapons program.

The Trump administration remains prepared to pressure North Korea economically if diplomatic negotiations fall apart.

 

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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