A significantly stronger U.S. dollar drove the precious metals sharply lower as markets reopened after the Labor Day holiday.
Spot gold lost 0.7% this morning (-$9) to $1,192/oz. This largely erased last week's gains.
However, the rest of the precious metals saw much steeper losses.
The silver price tumbled 2.5% (-37¢) to just $14.10/oz, its lowest in more than two and a half years.
Platinum slumped 2.3% (-$18) to dip below $770/oz.
Meanwhile, palladium was off more than 1.5% (-$15) to $962/oz.
Emerging Markets Slump
The dollar was lifted by the continued downturn for emerging markets and their currencies.
Leading this group lower were the Argentine peso, the Turkish lira, and the South African rand. Argentina is, in fact, appealing to the IMF for financial assistance as much of Latin America faces possible economic turmoil.
Accordingly, the dollar index rose 0.4% Tuesday morning to 95.5.
Trade tensions have played a large role in dragging the rest of the foreign exchange markets lower. An additional $200 billion of tariffs against Chinese goods is currently planned by the Trump administration.
At the same time, Washington has been busy negotiating a revamped North American Free Trade Agreement (NAFTA). There is speculation that Canada may well be left out of the deal. U.S. officials are hoping to finalize negotiations soon before Mexico's new president takes office later this year.
Manufacturing PMI data will be released in both the U.S. and Canada this morning.
It's not just the stronger dollar that emerging markets must contend with. Iran is reportedly exploring a scheme to issue its own national cryptocurrency in an attempt to skirt U.S. sanctions. Venezuela recently—and unsuccessfully—pursued a similar strategy.
Especially with metal prices hitting fresh lows, safe-haven demand for gold already appears to be on the rise. During August, gold imports into India surged to 11 metric tons, an eight-month high.
More Trade Woes
Uneasiness over international trade spread across global markets. In addition to a potential NAFTA impasse, the progress on Brexit negotiations has likewise been stalled. The deadline for a deal looms roughly six months away.
Thus, European markets fell in early trading. Shares were down as much as 1.5% on the continent while the FTSE 100 index in London slumped 0.7%.
The euro also traded in the red, losing 0.6% to $1.155. Britain's pound sterling recovered from earlier losses but was still just above $1.28.
Bonds lost ground this morning as the 10-year Treasury yield was up three basis points to 2.89%.
In general, however, debt markets have been relatively subdued despite the growing concern that markets could be vulnerable in the coming months.
The S&P 500 typically saves its worst monthly performance for September, according to data going back to 1945.
Stocks in Asia were mixed. The Shanghai Composite index added almost 1.3% overnight, but Japanese indices closed just below unchanged.
Oil prices could be poised to rise as Tropical Storm Gordon is on course to batter the U.S. Gulf Coast. WTI crude was up 1.7% this morning to $71/bbl.
Brent crude advanced 1.35% to $79.20/bbl while Shanghai crude for October delivery rose to $74.64/bbl (510.7 yuan per barrel).
The Shanghai gold price maintained a slight premium over Western benchmarks, trading at 263.7 yuan per gram, or $1,198.63 per troy ounce.
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