Both gold and silver prices are holding steady this morning after achieving modest gains overnight. The precious metal safe haven trade was blunted yesterday when the Treasury Department's auction of 30-year bonds flopped, driving yields higher. This jump in Treasury yields combined with a stronger dollar to lead gold to its fifth day of losses in a row.
At 10am in New York, gold was trading at $1,321.70 per ounce, lifting spot gold $3.30 higher, while December gold futures traded $2.00 lower. Spot silver was trading at $18.95 an ounce, 10 cents higher than the spot close and three cents under December silver settlement. The U.S. dollar was down marginally against a basket of currencies.
Yesterday was a rough day for precious metals, despite a last-minute dovish speech by Federal Reserve Board of Governors member Lael Brainard. We are still a week out from the release of the next FOMC statement; after Brainard's statement, many analysts are lowering the chances for a rate hike this month.
All four major precious metals ended lower on Tuesday, though December silver performed the best. Silver futures ended only 2.5 cents lower, while gold futures extended its losing streak to a fifth consecutive day, settling $1.90 lower at $1,323.70 an ounce.
The U.S. dollar rose 0.7% against a basket of its peer currencies, putting pressure on commodities such as oil, iron, and gold. Earlier in the trading session, the pound was up against the greenback, but has since corrected back to about $1.32.
Speaking of oil, crude futures were also hit by a very bearish forecast by the International Energy Agency (IEA), which pushed back the timeline for global oil demand to exceed supply until at least July 2017. The agency reported that global oil stockpiles have exceeded 3.1 billion barrels, the largest in history. Crude oil prices fell 3% yesterday and were down another 1% this morning.
Stocks Volatile Again
Meanwhile, stock markets in the U.S. and the U.K. were higher on Wednesday morning as their counterparts in Europe dipped into negative territory. After a prolonged period of quiet trading on Wall St, volatility and sharp price action have returned to the equities markets over the last week. Daniel Murray, the head of research at the London-based firm EFG Asset Management, said that traders "are coming back from a very quiet summer period when volatility was unusually low . . . Markets woke up again, and investors have started to reposition their portfolios."
All three U.S. stock indices were modestly higher in early trading despite downward pressure from the energy sector. By contrast, stocks from emerging markets continued their worst slump since June. It's worth noting that the uncertain path of monetary policy around the globe is continuing to weigh on markets as we approach the end of the third quarter.
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