A weaker dollar and perhaps creeping economic uncertainty lifted gold and silver prices Wednesday.
Spot gold traded above $1,232/oz, up about $8 (+0.7%).
Gold futures on COMEX rallied above $1,242 per ounce for their second straight day of gains, suggesting spot prices have more room to run this week.
The silver price was up 16¢ (+1.0%) to $15.60/oz.
Platinum jumped 1.3% to $842/oz and palladium surged 2.1% to move back above $925/oz.
Dollar Dips on Tariff Debate
With the menu of import duties imposed by and against the United States seeming to grow by the day, the dollar ran out of steam in foreign exchange markets Wednesday morning.
The DXY index pulled back from its recent rally to 94.4. Accordingly, the euro, yen, and pound all added roughly 0.2% against the USD.
Treasury bonds continued to trade close to a seven-week low. The 10-year yield shed one more basis point to 2.94%.
The tech-heavy Nasdaq was flat yesterday while the other two major indices each closed solidly higher.
Gold mining shares have languished near multi-year lows, lagging the broader markets. This is often a contrarian indicator that gold and other commodities are poised to rebound.
However, one of the biggest miners, Freeport-McMoRan, reported strong second-quarter earnings.
Other contrarian indicators—such as the pending inversion of the yield curve—have also been growing more pronounced. The point being: Markets could look very different six months from now.
International Markets Mostly Quiet
Trade uncertainty is one of the main concerns that could hamper global economic growth over the next 6–18 months.
Although there are other beneficiaries, President Trump's tariffs are likely to have a negative impact on farmers due to Chinese retaliation. The administration has proposed increasing farm subsidies by an additional $12 billion, but the plan doesn't appear to have the support of free-trade advocates from either party in Congress.
Throw in Brexit on top of the brewing trade war and the picture becomes even murkier. The terms of the separation of the U.K. from the EU remain undetermined, rousing political rancor on both sides of the English Channel. European equities lost as much as 0.7% Wednesday.
Markets were quiet overnight in Asia: the main index in Shanghai ended just below unchanged while both the Nikkei and Topix in Japan added around 0.4%.
Amid the short-term pain imposed on all parties by U.S. tariffs, President Trump will also be meeting with EU Commissioner Jean-Claude Juncker today.
Some political analysts are suggesting that the two leaders could strike an agreement on trade. However, the president has complained that his domestic critics are undermining America's negotiating position, which is the ostensible intent of the tariffs in the first place.
The weaker dollar boosted commodity prices. Crude oil rose modestly again: WTI was up about 25¢ (+0.35%) to $68.75/bbl while Brent moved almost 0.6% higher (+42¢) to $73.85/bbl.
Meanwhile, copper futures added 0.7% (+$1.95) to $2.83/lb.
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.