Gold Dips Lower to Start Week | August 6, 2018
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Gold Dips Lower to Start Week

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Gold Dips Lower to Start Week

Markets were in retracement mode as the precious metals wiped out their solid performance to end last week.

The gold price gave back its gains from Friday, slumping about $4 lower to $1,209/oz.

In the meantime, spot silver was off 9ยข (-0.55%) to $15.30/oz.

Platinum was down $6 (-0.7%) to $822/oz and palladium lost $5 (-0.55%) to trade at $900/oz.

Trade Fears Resurface

European markets wobbled Monday morning as the winds of the trade war are beginning to blow a bit harder as the summer progresses.

Although the EU has been only modestly engaged in the actual imposition of tariffs against other countries, Europe remains caught in the crossfire between the U.S. and China, the bloc's two biggest trading partners. Any worsening of the trade war leaves the eurozone economy vulnerable to disruption.

Indices around the region were down by about 0.2% this morning. This followed a report that industrial orders in Germany hit their lowest in almost 18 months.

Germany's industrial sector is often considered one of the bellwethers of the European economy as a whole.

Stocks were little changed on Wall St, meanwhile. Shares were mostly lower overnight in Asia as the Shanghai Composite closed down 1.3%.

Aside from tariffs, another issue directly related to trade is Brexit. Although failing to reach a Brexit deal greatly reduces the bargaining position of the U.K., this outcome appears increasingly likely with each passing day.

The pound sterling fell to an 11-month low below $1.295 against the dollar, reflecting a lack of confidence that Brexit will be carried out in an orderly manner.

Stronger Dollar Hits Currencies

The quiet opening for Wall St obscured the major movement for one of the best-known U.S. stocks, Tesla. The electric automaker saw its share price rally last week following its quarterly earnings. This triggered a massive short squeeze that could cost the company's naysayers as much as $2 billion.

Bonds were more calm, as the 10-year Treasury yield crept down another basis point to 2.94%.

The dollar was up about 0.3% on the DXY index to 95.4. In response, the euro sank to just $1.155.

There is also the possibility of a short squeeze in the gold market. Gold futures are heavy on the short side right now, which usually indicates there could be a turnaround soon.

Crude oil prices were up thanks to lower output in Saudi Arabia and the U.S. WTI crude rose 1.5% Monday to trade above $69.50/bbl.

In other news, wildfires continue to burn across California. Tragically, a 7.0-magnitude earthquake has taken the lives of nearly 100 people in Indonesia.

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.

About the Author

Everett Millman

Everett Millman

Analyst, Commodities and Finance
Managing Editor

Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.

In addition to blogging, Everett's work has been featured in CoinWeek, Advisor Perspectives, Wealth Management, Activist Post, and has been referenced by the Washington Post.

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