Gold prices spiked when markets opened in New York on Wednesday, mainly because of the panic generated by an assassination attempt of the Majority Whip in Congress, Louisiana Representative Steve Scalise at a friendly baseball game among lawmakers in Washington, D.C.
Scalise, a Republican, is said to be "badly injured" but will "fully recover," according to President Trump. At least five people were shot in the tragic incident. The gunman was taken into the custody of the Alexandria, VA police, but it was later reported that he died during the incident.
As markets opened and Americans tried to make sense of the sickening assassination attempt, gold prices responded to the fear and anxiety, gaining 1% to trade at $1,280/oz. Spot silver saw an even more dramatic spike, surging 2.7% to $17.25/oz. Platinum and palladium added 2.3% and 1.3%, respectively.
Responding to Tragedy
The senseless attack on Rep. Scalise and others brings back memories of the horrible attack on former Congresswoman Gabby Giffords in 2011. Giffords ultimately recovered from a gunshot wound to the head. Last year, amid the upheaval of the Brexit referendum in the U.K., a Member of Parliament was assassinated by a deranged constituent. Aside from the seemingly endless string of terror attacks on London and Paris over the past two years, there was also an armed attack of Canada's parliament building by Islamic terrorists last year.
While gold and the other precious metals predictably absorbed safe-haven demand following the shooting in the nation's capital, it's important to keep in mind that the strongest response from democratic societies is to support one another and, difficult as it may seem, carry on with everyday life. This kind of resolute response limits the fear and confusion that terrorists hope to inflict on us; that's why they're called "terrorists."
More bad news came from West London overnight, when a high-rise apartment building known as Grenfell Tower caught fire, consuming more than 20 floors in flames. Firefighters are still battling the inferno as of this morning. 12 people have perished in the fire thus far.
All of this startling news has overshadowed today's big decision on interest rates by the FOMC. While the central bank is widely expected to raise the federal funds rate by another 25 basis points this afternoon, the case for further rate hikes in 2017 may be losing steam. In two out of the last three months (including May), the consumer price index (CPI) has fallen, perhaps poking a hole in the Fed's narrative of only "transitory" weakness in the economy. This also contradicts other signs that inflation was beginning to accelerate. The Labor Department reported that CPI fell 0.1% last month, dragged down by lower energy prices.
In other economic news, retail sales in the U.S. also fell by the most in 16 months (dating back to January of last year) during May. However, when measured on a year-on-year basis, May's retail sales were actually up 3.8%. One the main culprits in the underwhelming performance was department stores and similar outlets, which saw sales drop by 1%. Brick-and-mortar stores have consistently been ceding market share to online retailers.
Despite all of the concerns, both from a financial and safety standpoint, equities were mostly higher this morning. Stocks rose in Europe and the U.S. this morning, though markets in Asia were down overnight. Like gold, Treasurys received a significant amount of safe-haven flight from investors, driving the 10-year yield to just 2.13%.
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.